SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the year ended
December 31, 1998
0-16690
(Commission File Number)
ML MEDIA OPPORTUNITY PARTNERS, L.P.
(Exact name of registrant as specified in its governing instruments)
Delaware
(State or other jurisdiction of organization)
13-3429969
(IRS Employer Identification No.)
World Financial Center
South Tower - 14th Floor
New York, New York 10080-6114
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(212) 236-6472
Securities registered pursuant to Section 12(b) of
the Act:
None
(Title of Class)
Securities registered pursuant to Section 12(g) of
the Act:
Units of Limited Partnership Interest
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No .
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in a definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
<PAGE>
Part I.
Item l. Business.
Formation
ML Media Opportunity Partners, L.P. (the "Partnership" or "Registrant"), a
Delaware limited partnership, was organized on June 23, 1987. Media Opportunity
Management Partners, a New York general partnership (the "General Partner"), is
Registrant's sole general partner. The General Partner is a joint venture,
organized as a general partnership under New York law, between RP Opportunity
Management, L.P. ("RPOM") and ML Opportunity Management Inc., ("MLOM"). MLOM is
a Delaware corporation and an indirect wholly-owned subsidiary of Merrill Lynch
& Co., Inc. and an affiliate of Merrill Lynch, Pierce, Fenner & Smith
Incorporated ("Merrill Lynch"). RPOM is organized as a limited partnership under
Delaware law, the general partners of which are EHR Opportunity Management,
Inc., and IMP Opportunity Management, Inc. As a result of the death of Elton H.
Rule, the owner of EHR Opportunity Management, Inc., the general partner
interest of EHR Opportunity Management, Inc. may either be acquired by IMP
Opportunity Management Inc. or its designee. The General Partner was formed for
the purpose of acting as general partner of Registrant.
Registrant was formed to acquire, finance, hold, develop, improve, maintain,
operate, lease, sell, exchange, dispose of and otherwise invest in and deal with
media businesses and direct and indirect interests therein.
Registrant received initial capitalization of $4,000 and $100 from the General
Partner and initial limited partners, respectively. On January 14, 1988,
Registrant commenced the offering through Merrill Lynch of up to 120,000 units
of limited partnership interest ("Units") at $1,000 per Unit. On March 23, 1988
and April 27, 1988, Registrant had its first and second closings on the sale of
99,131 and 13,016 Units, respectively, thereby admitting additional limited
partners to Registrant. As of December 31, 1998, total limited partners' and
General Partner's initial capital contributions were $112,147,100 and
$1,132,800, respectively.
Media Businesses
Registrant has completed the sale or disposition of all its Media Businesses
("Media Businesses") as defined in the Amended and Restated Agreement of Limited
Partnership (the "Partnership Agreement") as follows:
As of July 1, 1993, Registrant entered into three transactions to sell the
business of International Media Publishing, L.P. ("IMPLP")/International
Media Publishing, Inc. ("IMPI") and Intelidata Limited ("Intelidata"). On
August 27, 1997, Registrant received the final deferred sale payment
arising from the July 1, 1993 sale of its interest in IMPLP and Intelidata;
On September 30, 1993, Maryland Cable (as defined below) consummated the
sale of cable television systems owned and operated in Leesburg, Virginia;
On May 18, 1994, Registrant completed the sale of the assets of its cable
television systems in North Carolina (the "Windsor Systems");
Effective September 30, 1994, Registrant disposed of the business and
assets of its cable television systems in Maryland ("Maryland Cable");
On February 21, 1995, Registrant completed the sale of its radio station in
Virginia ("WMXN-FM");
On September 15, 1995, TCS Television Inc. ("TCS Inc.") completed the sale
of all of the outstanding capital stock of Avant Development Corporation,
the corporation which owned television station WRBL-TV ("Avant");
On May 29, 1996, Registrant sold all of its shares of Western Wireless
Corporation ("WWC") in an initial public offering of shares of common stock
of WWC;
On May 31, 1996, Registrant completed the sale of films and other projects
developed by Paradigm Entertainment, L.P. ("Paradigm"), a California based
company and a participating interest in Bob Banner Associates Development
("BBAD");
On April 15, 1997, TCS Television Partners, L.P. ("TCS") and TCS Inc. sold
all of the outstanding stock of Fabri Development Corporation ("Fabri");
and
On September 22, 1997, Registrant completed the sale of its interest in MV
Technology Limited ("MVT").
As of September 22, 1997, with the closing of the sale of MVT, Registrant
disposed of its last Media Business. As a result, as of September 22, 1998 (one
year following the disposition of its last Media Business), pursuant to the
Partnership Agreement, Registrant is in dissolution and its only remaining
activity is to wind up its affairs, which includes providing for or resolving
its remaining obligations and contingencies, and making a final cash
distribution, if any, to its partners. During 1998, the General Partner
continued to work to resolve Registrant's obligations and contingencies relating
to its former investments. As of December 31, 1998, these obligations and
contingencies amounted to approximately $1.6 million, in the aggregate, and are
recorded as a liability in the financial statements of Registrant. The General
Partner is working diligently to resolve these obligations and contingencies as
soon as practicable. However, as a result of outstanding litigation, Registrant
expects a delay in its liquidation (see Item 3).
Windsor Systems
On April 13, 1988, Registrant purchased all of the assets of the community
antenna television systems owned by Windsor Cablevision, Inc. serving four
communities in North Carolina. The purchase price of the Windsor Systems was
$4,287,500, of which $1,257,500 was paid for in cash and $3,030,000 was financed
by a seller note (the "Windsor Note").
On May 18, 1994, Registrant sold the assets of the Windsor Systems for
$3,443,200, subject to post-closing adjustments. At closing, Registrant repaid
the $2,050,058 of principal and interest then due under the Windsor Note, as
required by the terms of the Windsor Note. In addition, as required by the asset
purchase agreement, at closing, $342,160 (the "Escrowed Monies") was placed into
two separate escrow accounts to cover the potential costs of improving pole
attachments and other possible post-closing expenses. The remaining $1,050,982
in sales proceeds was applied or reserved to pay closing costs of the
transaction and certain pre-closing liabilities to third parties other than the
buyer. As of December 31, 1998, such obligations are reflected as liabilities in
the Consolidated Balance Sheet.
On August 29, 1996, approximately $190,000 was received by Registrant as final
settlement for post-closing adjustments related to the sale of the Windsor
Systems. As of September 30, 1996, Escrowed Monies of approximately $279,000
plus approximately $34,000 of interest was received by Registrant in full
settlement of the post-closing expense escrow. In addition, Escrowed Monies of
approximately $63,000 plus approximately $8,000 of interest was distributed to
the buyer in full settlement of the pole attachment escrow. As of December 31,
1996, no further amounts related to the Windsor Systems remain in escrow.
Registrant recognized a gain of $600,000 for financial reporting purposes in
1994 on the sale of the Windsor Systems and a gain of approximately $469,000 in
1996 for settlement of escrows and post-closing adjustments.
TCS Television Partners, L.P.
On January 17, 1990, Registrant entered into a limited partnership agreement
with Riverdale Media Corporation ("Riverdale"), forming TCS. The agreement was
subsequently amended to include Commonwealth Capital Partners, L.P.
("Commonwealth"),which is not affiliated with Registrant, as a limited partner.
Initially, Riverdale was the general partner of TCS, and owned 20.01% of the
entity. Registrant and Commonwealth were limited partners owning 41% and 38.99%,
respectively. Riverdale contracted with ML Media Opportunity Consulting
Partners, a wholly-owned subsidiary of Registrant, to provide management
services for TCS.
On June 19, 1990, TCS completed its acquisition of three network affiliated
television stations; WRBL-TV, the CBS affiliate serving Columbus, Georgia;
WTWO-TV, the NBC affiliate serving Terre Haute, Indiana; and KQTV-TV, the ABC
affiliate serving St. Joseph, Missouri.
The purchase price of $49 million, a non-compete payment of $7 million, and
starting working capital and closing costs of approximately $5 million were
funded by the sale by TCS of senior notes totaling $35 million and subordinated
notes totaling $10 million, and by equity contributions of $16 million, of which
approximately $8.15 million was contributed by Registrant. Registrant's total
equity contribution and incurred costs were approximately $8.3 million as of
December 31, 1994 (including approximately $170,000 noted below). In addition,
Registrant had loaned TCS approximately $400,000 for working capital purposes
during 1991.
On December 14, 1992, Registrant concluded agreements to restructure the debt
and ownership arrangements of TCS. TCS had been unable to generate sufficient
funds from operations to meet fully its original obligations under its note
purchase agreements. TCS's senior debt was amended to reschedule principal
payments, and its subordinated lenders agreed to defer all scheduled interest
and principal payments through December 15, 1995. As payment for a transaction
fee, the senior lenders were issued additional notes, due May 31, 1997, in the
amount of $350,000. All previous defaults under the senior and subordinated debt
were waived. The new debt arrangements were structured to provide TCS with three
years following the restructuring in which to improve operating performance and
avoid selling TCS in the then-illiquid transaction market for broadcast
television stations.
Concurrently, the equity partners in TCS agreed to seek regulatory approval to
alter the ownership structure of the company. On March 26, 1993, Registrant was
granted such approval by the Federal Communications Commission ("FCC"). As a
result, on March 26, 1993, Registrant and Commonwealth purchased the 20.01%
ownership interest held by Riverdale. On March 26, 1993, a wholly-owned
subsidiary of Registrant, TCS Management Corporation became the new sole general
partner of TCS and Registrant's total ownership interest in TCS increased from
41% to 51.005% (1% of which is the general partner interest). Registrant
utilized approximately $170,000 of its working capital reserve to acquire the
additional 10.005% interest.
TCS entered into an agreement (the "Sub-Debt Proceeds Sharing Agreement") dated
September 17, 1996 with the holders of its subordinated debt under which the
lenders agreed that TCS would be entitled to share in the net proceeds of the
sale of the TCS stations in accordance with a formula set forth in such
agreement.
On September 15, 1995, TCS Inc. completed the sale to The Spartan
Radiocasting Company ("Spartan") of all of the outstanding capital stock of
Avant, a 100% owned corporate subsidiary of TCS Inc., which owns WRBL-TV, for a
net sales price of $22.7 million. From the proceeds of the sale, a reserve of
approximately $1.4 million was established to cover certain expenses and
liabilities relating to the sale and $1,250,000 was deposited into an indemnity
escrow account to secure TCS Inc.'s indemnification obligations to Spartan for
taxes and other liabilities. In addition, approximately $18.9 million was
applied to repay a portion of TCS' total indebtedness, which was secured by a
pledge of the shares of Fabri. Approximately $1.1 million was applied to closing
costs. Registrant recognized a gain, for financial reporting purposes, on the
sale of Avant of approximately $17.6 million, partially offset by a reserve for
estimated losses on such future sale of the remaining television stations of TCS
of approximately $9.9 million. During 1997 and 1998, $1 million plus accrued
interest of approximately $74,000 and $250,000 plus accrued interest of
approximately $54,000, respectively, were returned to TCS from the indemnity
escrow relating to the sale of Avant. In addition, during 1998, approximately
$176,000 of a final working capital adjustment relating to the sale of Avant was
received by TCS.
On April 15, 1997, TCS and TCS Inc. (jointly, the "Sellers"), completed the sale
to Nexstar Broadcasting Group, L.L.C. ("Nexstar") of all of the outstanding
capital stock of Fabri. Before the consummation of the sale, Nexstar assigned
its rights under the Stock Purchase Agreement (the "Stock Purchase Agreement")
to Nexstar Broadcasting of the Midwest Inc. The base purchase price for the
outstanding shares of Fabri was $31,323,922 after a working capital adjustment.
Pursuant to the terms of the Stock Purchase Agreement and the Sub-Debt Proceeds
Sharing Agreement, after application of the proceeds generated by the sale to
the payment of transaction expenses resulting from the sale and to the
establishment of two separate escrow accounts totaling $1,750,000, the remaining
proceeds received from the sale were applied as follows: $23,757,072 to repay
certain amounts to TCS's lenders; $1,022,534 to repay outstanding principal and
accrued interest on a loan made to TCS by Registrant; and $2,604,601 and
$1,736,400 to pay Registrant and Commonwealth, respectively, their share of
certain accrued and unpaid consulting fees. During 1997 and early 1998,
$1,750,000 (the entire escrowed amount) plus accrued interest of approximately
$63,000 was returned to TCS from escrows related to the sale of Fabri.
In 1998, from the cumulative amount of proceeds from the sale of both Avant and
Fabri, including the released escrowed funds, TCS paid its lenders approximately
$1,280,000 and paid approximately $656,000 of accrued expenses. In addition, TCS
paid $1,929,707 and $1,286,472 to Registrant and Commonwealth, respectively,
representing their share of certain accrued and unpaid consulting fees, and paid
$748,292 each to Registrant and Commonwealth, representing their share of the
net proceeds. Registrant still has an interest in the remaining net assets of
TCS (approximately $100,000), which is consolidated into the Registrant's
financial statements as of December 31, 1998. Registrant recorded income of
$1,135,371 and $5,359,986 during 1998 and 1997, respectively, related to the
sale of TCS.
Paradigm Entertainment
On June 15, 1989, Registrant entered into a limited partnership agreement
(the "Paradigm Agreement") with ML Media Opportunity Productions, Inc.
("Productions"), the Gary L. Pudney Co. ("GLP Co."), and Bob Banner Associates
Inc. ("Associates") to form Paradigm, a broadcast and cable television
production company based in California. Productions is a corporation, 100% owned
by Registrant, formed to hold a 1% general partnership interest in Paradigm.
Initially, Registrant owned 49% of Paradigm as a limited partner, while GLP Co.
and Associates each had a 25% ownership share in Paradigm as general partners.
GLP Co. pledged the exclusive services of Gary L. Pudney and Associates pledged
the exclusive services of Bob Banner for the duration of Paradigm's operations.
On May 31, 1991, Registrant, Productions, GLP Co. and Associates entered into a
new agreement (the "Revised Paradigm Agreement") that amended the original
Paradigm Agreement. Under the terms of the Revised Paradigm Agreement, effective
June 16, 1991 the general partner interests of GLP Co. and Associates in
Paradigm were converted to limited partner interests. GLP Co. and Associates
each retained their 25% ownership in Paradigm and Registrant retained its 50%
beneficial interest. Under the terms of the Revised Paradigm Agreement, Paradigm
retained ownership of all program concepts developed by Paradigm prior to June
15, 1991, but assigned the task of further developing these program concepts to
GLP Co. and/or Associates as independent contractors. Per the Revised Paradigm
Agreement, if GLP Co. or Associates were to develop any new program concepts
during the period in which they were acting as independent contractors for
Paradigm, GLP Co. or Associates would be required to offer Paradigm the right to
finance the production of such program concepts. Regardless of Paradigm's
decision to finance the further development of the new program concepts,
Paradigm would receive a share of the profits and fees, if any, from such new
program concepts.
The consulting agreements described above expired on December 31, 1991.
Effective with the expiration, Associates continued, without a formal agreement,
to develop projects to offer to Paradigm. As was the case under the Revised
Paradigm Agreement, Registrant had the option of financing such projects in
return for equity interests in such projects.
Effective June 23, 1992, Paradigm formed a general partnership with Associates
to start a new production company Bob Banner Associates Development ("BBAD").
Paradigm and/or BBAD are not currently producing television programs, and
Registrant has not advanced any funds to Paradigm and/or BBAD since the second
quarter of 1992. Paradigm and/or BBAD took several steps in 1992 and 1993 to
reduce operating costs, primarily by reducing the number, and compensation, of
employees. However, Paradigm and/or BBAD did not operate profitably during 1993,
and were dependent on outside sources, primarily Associates, to finance BBAD's
monthly operating costs. Registrant elected not to fund such operating costs.
Due in part to Registrant's unwillingness to advance additional funds to fund
the continuing operating losses and possible winding down of Paradigm's and
BBAD's operating activities, Registrant recorded in 1993 a writedown of
approximately $516,000 of its investment in Paradigm and BBAD to reduce
Registrant's net investment to zero. Registrant actively sought a strategic
partner that would share in meeting Paradigm's and/or BBAD's potential future
funding needs but was unable to identify such a partner. Paradigm and/or BBAD
have no liability for borrowed funds. Registrant entered into an agreement with
Associates under which Paradigm retained the three television movies and the
series developed by it, and the other projects and program concepts developed by
Paradigm and/or BBAD were assigned to Associates, and Paradigm retained a
percentage interest in all such projects and concepts.
During 1996, Registrant received proceeds of $135,000 from Paradigm's sale of
Registrant's remaining interests in the films and other projects developed by
Paradigm and assigned to Associates. Registrant recognized a gain for financial
reporting purposes of $135,000 on the sale of the films and other projects in
1996, offset by operational losses of $53,201. Although Registrant is no longer
advancing funds for continuing operations and Paradigm has no operating assets,
Registrant is liable for certain liabilities of Paradigm. These liabilities are
reflected in the Consolidated Balance Sheet as of December 31, 1998.
Investments and EMP, Ltd. and MVT
On September 1, 1989, Registrant entered into various agreements with Peter
Clark and Alan Morris to form U.K. entities (the "Media Ventures Companies")
that would develop and invest in media businesses in Europe. Pursuant to the
terms of these agreements, Registrant advanced $2.0 million to Media Ventures
Investments ("Investments") and its predecessors between 1989 and December 31,
1991. During 1991, and following Registrant's decision not to advance additional
funds to the Media Ventures Companies beyond Registrant's initial $2.0 million
commitment, the Media Ventures Companies secured funding from a third party, ALP
Enterprises, Inc. ("ALP Enterprises") to allow the Media Ventures Companies to
continue their operations. Due to: (i) Registrant's unwillingness to advance
additional funds to the Media Ventures Companies; and (ii) the Media Ventures
Companies' resultant reliance on funding from ALP Enterprises, Registrant's
ownership in the Media Ventures Companies was diluted -- through a number of
restructurings of the ownership of the Media Ventures Companies -- as ALP
Enterprises advanced funds to the Media Ventures Companies.
As of December 31, 1993, the Media Ventures Companies had started, or made
investments in, a number of media businesses, including an investment in 1992 in
Teletext U.K., Ltd. ("Teletext"), a newly formed U.K. corporation organized to
acquire U.K. franchise rights to provide data in text form to television viewers
via television broadcast sidebands. The investment of the Media Ventures
Companies in Teletext was initially held by European Media Partners, Ltd.
("EMP"), the primary operating holding company organized by the Media Ventures
Companies. Following a July 30, 1993 restructuring, EMP was owned 13.8% by
Registrant, 45.6% by Clarendon (a company controlled by the founders and
management of the Media Ventures Companies),and 40.6% by ALP Enterprises.
Registrant also owned 36.8% of the common stock of Investments (which was, and
remained, essentially inactive), ALP Enterprises owned 13.8%, Clarendon owned
41.4%, and Charles Dawson (who manages a business in which the Media Ventures
Companies had an investment) owned 8.0%. Subsequently, Christopher Turner as
nominee, purchased Charles Dawson's interest for a nominal fee.
During 1995, the Media Ventures Companies continued to distribute television
programs, to monitor the Teletext investment held by MVT (see below), and to
attempt to expand the operations of the Media Ventures Companies into new areas
of European media.
Effective August 12, 1994, Registrant and EMP restructured the ownership of EMP
and certain of its subsidiaries in order to enable EMP to attract additional
capital from ALP Enterprises and other potential third party investors. In the
restructuring, based on certain representations from EMP and ALP Enterprises,
Registrant sold to Clarendon and ALP Enterprises for nominal consideration
Registrant's shares in EMP. Simultaneously, Registrant and EMP entered into an
agreement whereby EMP's 10% interest in Teletext was transferred, together with
a (pound)350,000 loan (approximately $543,000 at then-current exchange rates)
from EMP to a newly formed entity, MVT. After the transfer, Registrant owned
13.8% of the issued common shares of MVT, while EMP owned the remaining 86.2%.
MVT's purpose was to manage its sole asset, a 10% interest in Teletext, a United
Kingdom corporation organized to acquire United Kingdom franchising rights to
provide data in text form to television viewers via television broadcast
sidebands. Registrant had held an indirect 1.38% interest in Teletext. MVT paid
an annual fee to EMP for management services provided by EMP in connection with
overseeing MVT's investment in Teletext.
Following the restructuring, Registrant no longer had any interest in EMP.
Registrant had the right to require EMP to purchase Registrant's interest in MVT
at any time between December 31, 1994 and December 31, 1997. EMP had the right
to require Registrant to sell Registrant's interest in MVT to EMP at any time
between September 30, 1995 and September 30, 1998. In January, 1996, EMP
exercised its right to require Registrant to sell its interest in MVT to EMP,
and notified Registrant of its intention to acquire Registrant's interest.
On September 22, 1997, Registrant, pursuant to the option exercised by EMP,
completed the sale of its investment, a restructured 13.8% ownership interest in
MVT for approximately $481,000.
During 1996 and 1995, Registrant received approximately $87,000 and $108,000,
respectively, in dividends from MVT.
IMPLP/IMPI and Intelidata
On June 22, 1990, Registrant entered into a limited partnership agreement
whereby Registrant and ML Media International, Inc. (a wholly-owned subsidiary
of Registrant), together with Venture Media & Communications, L.P. and Tyler
Information Strategies, Inc. ("Tyler") formed IMPLP and its wholly-owned
subsidiary, IMPI to develop European business information businesses. IMPLP/IMPI
originally developed, produced and marketed a newsletter and certain related
products focusing on European media business and finance. In the fourth quarter
of 1991, Registrant expanded IMPLP/IMPI's European business information
activities by acquiring -- through a newly-formed corporation, Intelidata
Limited ("Intelidata") -- a division of Logica plc. IMPLP/IMPI/Intelidata did
not operate profitably, and were dependent on Registrant for working capital
advances. Registrant sought a strategic partner to invest in
IMPLP/IMPI/Intelidata, but was unable to identify such a partner. Registrant
therefore arranged to sell IMPLP/IMPI/Intelidata, and consummated the sale of
the businesses effective July 1, 1993 (see below). As of July 1, 1993,
Registrant had advanced approximately $4.2 million, and Tyler had advanced
approximately $100,000 (including $50,000 advanced to a predecessor company of
IMPLP) to IMPLP/IMPI/Intelidata.
Effective July 1, 1993, Registrant entered into three transactions to sell the
business and assets of IMPLP, IMPI and Intelidata. In two separate transactions,
Registrant sold the entire business and substantially all of the assets of
IMPLP/IMPI and a portion of the business and assets of Intelidata to Phillips
Business Information, Inc. ("PBI") for future consideration based on the
revenues of IMPLP/IMPI and the portion of the Intelidata business acquired by
PBI. At closing, PBI made advances of $100,000 and $150,000 to IMPLP/IMPI and
Intelidata, respectively, which advances would be recoverable by PBI from any
future consideration payable by PBI to Registrant. In addition, PBI agreed to
assume certain liabilities of IMPLP/IMPI and Intelidata.
In the third transaction, Registrant sold the remaining business and assets of
Intelidata, which were not sold to PBI, to Romtec plc. ("Romtec") in exchange
for future consideration, based on both the amount of assets and liabilities
transferred to Romtec and the combined profits of the portion of the Intelidata
business acquired by Romtec and another, existing division of Romtec. In
addition, certain liabilities of Intelidata were assumed by Romtec. During 1997,
it was determined that no consideration would be payable from the sale to
Romtec. As a result of the above activity, Registrant has no remaining interests
in IMP/Intelidata.
Subsequent to the sale of the businesses, Registrant advanced net additional
funds totaling approximately $120,000 through December 31, 1998 to IMPLP/IMPI
and Intelidata to fund cash shortfalls resulting from the pre-sale claims of
certain creditors. Registrant anticipates that it will make additional such
advances to IMPLP/IMPI and Intelidata during 1999. These obligations are
reflected as a liability in the Registrant's Consolidated Balance Sheet as of
December 31, 1998.
On August 27, 1997, Registrant received approximately $160,000 representing the
final deferred sale payment arising from the July 1, 1993 sale of its interest
in IMPLP and Intelidata.
Disposition of WWC
On May 29, 1996, Registrant sold all of its 1,090,162 shares of WWC at a price
of $23.50 per share in an initial public offering of shares of common stock of
WWC. The 1,090,162 shares of WWC sold by Registrant represented all of the
shares held by Registrant, after giving effect to a 3.1 to 1 stock split
immediately prior to the offering. As a result, on May 29, 1996, Registrant
received $24,147,088 in net proceeds for its 1,090,162 shares, after payment of
underwriter's commission in connection with the sale. Registrant recognized a
gain of approximately $22.8 million on the sale of its WWC stock.
On July 29, 1996, Registrant made a cash distribution to limited partners of
record on May 31, 1996, of $214 per Unit totaling $23,999,458 and $242,419 to
the General Partner of net distributable sale proceeds from the sale of its
stock of WWC and the remaining interests in films and other projects developed
by Paradigm (see above).
Employees.
As of December 31, 1998, Registrant and its consolidated subsidiaries did not
employ any persons. The business of Registrant is managed by the General
Partner. RPOM, MLOM and ML Leasing Management Inc., all affiliates of the
General Partner, employ individuals who perform the management and
administrative services for Registrant.
Item 2. Properties.
The offices of RPOM and MLOM are located at 350 Park Avenue - 16th Floor, New
York, New York 10022 and at The World Financial Center, South Tower - 14th
Floor, New York, New York, 10080-6114; respectively.
Item 3. Legal Proceedings.
On August 29, 1997, a purported class action was commenced in New York Supreme
Court, New York County, on behalf of the limited partners of Registrant, against
Registrant, the General Partner, the General Partner's two partners, MLOM and
RPOM, Merrill Lynch & Co., Inc. and Merrill Lynch. The action concerns
Registrant's payment of certain management fees and expenses to the General
Partner and the payment of certain purported fees to an affiliate of RPOM.
Specifically, the plaintiffs allege breach of the Partnership Agreement, breach
of fiduciary duties and unjust enrichment by the General Partner in that the
General Partner allegedly: (1) improperly failed to return to plaintiffs and the
alleged class members certain uninvested capital contributions in the amount of
$18.5 million (less certain reserves), (2) improperly paid itself management
fees in the amount of $18.3 million, and (3) improperly paid MultiVision Cable
TV Corp., an affiliate of RPOM, supposedly duplicative management fees in an
amount in excess of $6 million. In addition, plaintiffs assert a claim for
quantum meruit, supposedly seeking credit for, and counsel fees based on, the
benefit received by the limited partners as a result of the voluntary payment
made by Merrill Lynch to Registrant in March 1997, in the amount of
approximately $23 million, representing management fees, certain expenses, and
interest paid by Registrant to the General Partner since 1990.
With respect to Merrill Lynch & Co., Inc., Merrill Lynch, MLOM and RPOM,
plaintiffs claim that these defendants aided and abetted the General Partner in
the alleged breach of the Partnership Agreement and in the alleged breach of the
General Partner's fiduciary duties. Plaintiffs seek, among other things, an
injunction barring defendants from paying themselves management fees or expenses
not expressly authorized by the Partnership Agreement, an accounting,
disgorgement of the alleged improperly paid fees and expenses, return of
uninvested capital contributions, counsel fees, and compensatory and punitive
damages. Defendants believe that they have good and meritorious defenses to the
action, and vigorously deny any wrongdoing with respect to the alleged claims.
Defendants moved to dismiss the complaint and each claim for relief therein. On
March 3, 1999, the New York Supreme Court issued an order granting Registrant's
and co-defendants' motion and dismissing plaintiffs' complaint in its entirety,
principally on the ground that the claims are derivative and plaintiffs lack
standing to bring suit because they failed to make a pre-litigation demand on
the General Partner. Plaintiffs' time to appeal has not yet expired.
The Partnership Agreement provides for indemnification, to the fullest extent
provided by law, for any person or entity named as a party to any threatened,
pending or completed lawsuit by reason of any alleged act or omission arising
out of such person's activities as a General Partner or as an officer, director
or affiliate of either RPOM, MLOM or the General Partner, subject to specified
conditions. In connection with the purported class action noted above,
Registrant has received notices of requests for indemnification from the
following defendants named therein: the General Partner, MLOM, RPOM, Merrill
Lynch & Co., Inc., and Merrill Lynch. For the years ended December 31, 1998 and
1997, Registrant incurred approximately $207,000 and $160,000, respectively, for
legal costs relating to such indemnification. Such cumulative costs amount to
approximately $367,000 through December 31, 1998.
Registrant is not aware of any other material legal proceedings.
Item 4. Submission of Matters to a Vote of Security Holders.
There were no matters which required a vote of the limited partners of
Registrant during the fourth quarter of the fiscal year covered by this report.
<PAGE>
Part II.
Item 5. Market for Registrant's Common Stock and Stockholder Matters.
An established public market for Registrant's Units does not now exist, and it
is not anticipated that such a market will develop in the future. Accordingly,
accurate information as to the market value of a Unit at any given date is not
available.
As of February 10, 1999, the number of owners of Units was 14,748.
Merrill Lynch has implemented guidelines pursuant to which it reports estimated
values for limited partnership interests originally sold by Merrill Lynch (such
as Registrant's Units) two times per year. Such estimated values will be
provided to Merrill Lynch by independent valuation services based on financial
and other information available to the independent services on (1) the prior
August 15th for reporting on December year-end and subsequent client account
statements through the following May's month-end client account statements and
on (2) March 31st for reporting on June month-end and subsequent client account
statements through the November month-end client account statements of the same
year. The estimated values provided by the independent services are not market
values and Unit holders may not be able to sell their Units or realize such
amount upon a sale of their Units. In addition, Unit holders may not realize the
independent estimated value upon the liquidation of Registrant.
Registrant does not distribute dividends, but rather distributes Distributable
Cash From Operations, Distributable Refinancing Proceeds, and Distributable Sale
Proceeds, to the extent available. On June 6, 1989, Registrant made a federal
tax allowance cash distribution in an amount equal to 33% of the 1988 federal
taxable income to all limited partners owning Units in 1988 in proportion to
their federal taxable income from the ownership of Units. The total amount
distributed was $2,040,121. In the fourth quarter of 1994, Registrant made a
cash distribution of $8,971,760 to its limited partners and $90,624 to its
General Partner following the disposition of Maryland Cable. In the second
quarter of 1995, Registrant made a cash distribution of $2,915,822 to its
limited partners and $29,453 to its General Partner following the sale of radio
station WMXN-FM. On July 29, 1996, Registrant made a cash distribution of
$23,999,458 to its limited partners and $242,419 to its General Partner
following the sale of its stock of Western Wireless Corporation and the
remaining interests in films and other projects developed by Paradigm
Entertainment, L.P. On April 2, 1997, Registrant made a cash distribution of
$23,671,989 to its limited partners of record as of March 24, 1997. See the
"Liquidity and Capital Resources" section of Item 7 "Management's Discussions
and Analysis of Financial Condition and Results of Operations" for additional
information regarding the April 1997 cash distribution.
<PAGE>
Item 6. Selected Financial Data.
<TABLE>
<S> <C> <C> <C>
Year Ended Year Ended Year Ended
December 31, 1994 December 31, 1995 December 31, 1996
----------------- ----------------- -----------------
Interest income $ 430,730 $ 105,808 $ 290,820
============= ============= =============
(Loss)/Income from Partnership operations (3,101,614) (2,270,461) 21,433,458
============= ============= =============
(Loss)/Income from discontinued operations (10,426,057) - 81,799
============= ============= =============
Gain on Sale of discontinued operations 600,000 9,471,059 -
============= ============= =============
Extraordinary item 130,330,596 - -
============= ============= =============
Cash distributions paid to partners 9,062,384 2,945,275 24,241,877
============= ============= =============
Per Unit of Limited Partnership Interest:
(Loss)/Income from Partnership operations $ (27.38) $ (20.04) $ 189.21
============= ============= =============
(Loss)/Income from discontinued operations (92.04) - .72
============= ============= =============
Gain on Sale of discontinued operations 5.30 83.61 -
============= ============= =============
Extraordinary item 1,150.52 - -
============= ============= =============
Cash distributions paid to partners 80.00 26.00 214.00
============= ============= =============
As of As of As of
December 31, 1994 December 31, 1995 December 31, 1996
----------------- ----------------- -----------------
Total Assets $ 3,950,040 $ 2,889,001 $ 2,387,661
============= ============= =============
Number of Units 112,147.1 112,147.1 112,147.1
============= ============= =============
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
Year Ended Year Ended
December 31, 1997 December 31, 1998
----------------- -----------------
Interest income $ 260,438 $ 339,093
============= =============
Loss from Partnership operations (995,105) (571,192)
============= =============
Income from discontinued operations 5,359,986 -
============= =============
Cash distributions paid to partners 23,671,989 -
============= =============
Per Unit of Limited Partnership Interest:
Loss from Partnership operations $ (8.78) $ (5.04)
============= =============
Income from discontinued operations 47.31 -
============= =============
Cash distributions paid to partners 211.08 -
============= =============
As of As of
December 31, 1997 December 31, 1998
----------------- -----------------
Total Assets $ 13,361,127 $ 10,279,452
============= =============
Number of Units 112,147.1 112,147.1
============= =============
</TABLE>
<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
Liquidity and Capital Resources.
As of December 31, 1998, Registrant had $10,152,858 in cash and cash
equivalents.
As of September 22, 1997, with the closing of the sale of MV Technology Limited
("MVT"), Registrant disposed of its last Media Business, as defined in the
Amended and Restated Agreement of Limited Partnership (the "Partnership
Agreement"). As a result, as of September 22, 1998 (one year following the
disposition of its last Media Business), pursuant to the Partnership Agreement,
Registrant is in dissolution and its only remaining activity is to wind up its
affairs, which includes providing for or resolving its remaining obligations and
contingencies (see below), and making a final cash distribution, if any, to its
partners. During 1998, the General Partner continued to work to resolve
Registrant's obligations and contingencies relating to its former investments.
As of December 31, 1998, these obligations and contingencies amounted to
approximately $1.6 million, in the aggregate and are recorded as a liability in
the financial statements of Registrant. The General Partner is working
diligently to resolve these obligations as soon as practicable.
Registrant's ongoing cash needs will be to fund its existing obligations and
costs in connection with the liquidation of Registrant, as well as providing for
costs and expenses related to the purported class action lawsuit described
below. Media Opportunity Management Partners (the "General Partner") currently
anticipates that the pendency of such litigation, as described below, related
claims against Registrant for indemnification, other costs and expenses related
to such litigation, and the involvement of management, will adversely affect (a)
the timing of the termination of Registrant, (b) the amount of proceeds which
may be available for distribution, and (c) the timing of the distribution to the
limited partners of any net proceeds that remain after resolving such
obligations and contingencies.
On March 27, 1997, Registrant received a voluntary cash payment of $23,671,989
(the "Cash Payment") from Merrill Lynch, Pierce, Fenner & Smith Incorporated
("Merrill Lynch"), an affiliate of the General Partner, for distribution to
limited partners. Pursuant to an amendment to the Partnership Agreement dated
March 24, 1997 (the "Amendment"), the Cash Payment was distributable solely to
limited partners. On April 2, 1997, Registrant distributed all the proceeds of
the Cash Payment, or $211.08 per $1,000 limited partnership unit ("Unit"), to
limited partners of record as of March 24, 1997. The Cash Payment has been
treated in the accompanying financial statements as a capital contribution by
the General Partner and simultaneously as a transfer to the limited partners'
capital.
Also, pursuant to the Amendment, Registrant's obligation to pay a Partnership
Management Fee and a Property Management Fee for 1996 and subsequent periods was
terminated. However, the General Partner continued to provide services on behalf
of Registrant. In accordance with the Amendment, Registrant has no obligation to
pay for these services and will not pay for such services. However, in
accordance with generally accepted accounting principles, for financial
reporting purposes, amounts equal to these services for 1998 and 1997 of
$1,813,960 and $1,869,597, respectively, have been treated in the accompanying
income statements as an expense with a corresponding increase in General
Partner's capital. Similarly, an amount representing these services for 1996 of
$2,144,597 was treated as an increase in General Partner's capital and a
reduction of management fee payable in the Partnership's first quarter 1997
financial statements. In conjunction with the General Partner's capital
increases mentioned above, a transfer was made to the limited partners' capital
in an aggregate amount of $1,795,820 and $3,974,052 during 1998 and 1997,
respectively, which represents the limited partners' share (99%) of the capital
contribution of such services. The foregoing expense and capital transfer have
no effect on the capital of the limited partners or the General Partner.
In addition, in 1997, Merrill Lynch paid for certain expenses of $73,000 on
behalf of Registrant which were incurred by Registrant in 1996. In accordance
with generally accepted accounting principles, for financial reporting purposes,
such amount was treated in the 1996 statement of operations as an expense of
Registrant and, when payment was made in 1997, as an increase in General
Partner's capital. Simultaneously with the payment, a transfer was made to the
limited partners' capital in an amount of $72,270, which represents the limited
partners' share (99%) of the amount of such expenses. The foregoing capital
transactions increased capital of the General Partner and the limited partners
in an amount corresponding to the decreases to capital recorded for such
expenses in 1996. Thus, there was no effect on the General Partner or the
limited partners' capital.
On August 29, 1997, a purported class action was commenced in New York Supreme
Court, New York County, on behalf of the limited partners of Registrant, against
Registrant, the General Partner, the General Partner's two partners, ML
Opportunity Management Inc. ("MLOM") and RP Opportunity Management, L.P.
("RPOM"), Merrill Lynch & Co., Inc. and Merrill Lynch. The action concerns
Registrant's payment of certain management fees and expenses to the General
Partner and the payment of certain purported fees to an affiliate of RPOM.
Specifically, the plaintiffs allege breach of the Partnership Agreement, breach
of fiduciary duties and unjust enrichment by the General Partner in that the
General Partner allegedly: (1) improperly failed to return to plaintiffs and the
alleged class members certain uninvested capital contributions in the amount of
$18.5 million (less certain reserves), (2) improperly paid itself management
fees in the amount of $18.3 million, and (3) improperly paid MultiVision Cable
TV Corp., an affiliate of RPOM, supposedly duplicative management fees in an
amount in excess of $6 million. In addition, plaintiffs assert a claim for
quantum meruit, supposedly seeking credit for, and counsel fees based on, the
benefit received by the limited partners as a result of the voluntary payment
made by Merrill Lynch to Registrant in March 1997, in the amount of
approximately $23 million, representing management fees, certain expenses, and
interest paid by Registrant to the General Partner since 1990.
With respect to Merrill Lynch & Co., Inc., Merrill Lynch, MLOM and RPOM,
plaintiffs claim that these defendants aided and abetted the General Partner in
the alleged breach of the Partnership Agreement and in the alleged breach of the
General Partner's fiduciary duties. Plaintiffs seek, among other things, an
injunction barring defendants from paying themselves management fees or expenses
not expressly authorized by the Partnership Agreement, an accounting,
disgorgement of the alleged improperly paid fees and expenses, return of
uninvested capital contributions, counsel fees, and compensatory and punitive
damages. Defendants believe that they have good and meritorious defenses to the
action, and vigorously deny any wrongdoing with respect to the alleged claims.
Defendants moved to dismiss the complaint and each claim for relief therein. On
March 3, 1999, the New York Supreme Court issued an order granting Registrant's
and co-defendants' motion and dismissing plaintiffs' complaint in its entirety,
principally on the ground that the claims are derivative and plaintiffs lack
standing to bring suit because they failed to make a pre-litigation demand on
the General Partner. Plaintiffs' time to appeal has not yet expired.
The Partnership Agreement provides for indemnification, to the fullest extent
provided by law, for any person or entity named as a party to any threatened,
pending or completed lawsuit by reason of any alleged act or omission arising
out of such person's activities as a General Partner or as an officer, director
or affiliate of either RPOM, MLOM or the General Partner, subject to specified
conditions. In connection with the purported class action noted above,
Registrant has received notices of requests for indemnification from the
following defendants named therein: the General Partner, MLOM, RPOM, Merrill
Lynch & Co., Inc., and Merrill Lynch. For the years ended December 31, 1998 and
1997, Registrant incurred approximately $207,000 and $160,000, respectively, for
legal costs relating to such indemnification. Such cumulative costs amount to
approximately $367,000 through December 31, 1998.
Results of Operations.
1998
Registrant generated a net loss of approximately $571,000 in 1998, which was
comprised of the following components: (1) services provided by the General
Partner of approximately $1.8 million; (2) professional fees of approximately
$232,000; partially offset by (3) interest income of approximately $339,000 and
(4) the recognition of approximately $1.1 million in income resulting from the
prior sale of TCS Television Partners, L.P. ("TCS").
Pursuant to the Amendment, Registrant's obligation to pay management fees for
1996 and subsequent periods was terminated. However, the General Partner
continues to provide services on behalf of Registrant. In accordance with the
Amendment, Registrant did not pay for these services and will not pay for such
services in the future. However, in accordance with generally accepted
accounting principles, for financial reporting purposes, an amount equal to
these services is treated as an expense with a corresponding increase in General
Partner's capital. The foregoing expense and related capital transfer have no
effect on the capital of the limited partners or the General Partner. Therefore,
Registrant's net income for the years ended 1998, 1997, and 1996, excluding
services provided by the General Partner, would have been approximately $1.2
million, $6.2 million, and $23.7 million, respectively.
1997
Registrant generated net income of approximately $4.4 million in 1997, which was
comprised of the following components: (1) the recognition of approximately $5.4
million in income resulting from the sale of TCS; (2) one-time gains on the sale
of MVT and International Media Publishing, L.P./Intelidata Limited
("Intelidata") of approximately $481,000 and $160,000, respectively, and (3)
interest income of approximately $260,000; partially offset by services provided
by the General Partner of approximately $1.9 million and professional fees of
approximately $198,000.
1996
Registrant generated net income of approximately $21.5 million in 1996, which
was comprised of the following components: (1) a gain of approximately $22.8
million on the sale of the stock of Western Wireless Corporation ("WWC"), (2)
interest income of approximately $291,000, (3) income from dividends received
from MVT of approximately $87,000, (4) approximately $469,000 from monies
released from escrow and other post closing adjustments relating to the sale of
the assets of its cable television systems in North Carolina, (5) a gain of
$135,000 on the sale of Registrant's interests in films and other projects
developed by Paradigm Entertainment, L.P. ("Paradigm") partially offset by (a)
management fee expenses of approximately $2.1 million, (b) operational losses at
Paradigm of approximately $53,000 and (c) professional fees of approximately
$112,000.
1998 vs. 1997
The decrease in net income of approximately $4.9 million from 1997 is primarily
attributable to the recognition of approximately $5.4 million of income in 1997
resulting from the sale of TCS and one-time gains of approximately $481,000 and
$160,000 recognized in 1997 on the sales of MVT and Intelidata, respectively;
partially offset by approximately $1.1 million of income related to TCS in 1998.
1997 vs. 1996
The decrease in net income of approximately $17.2 million from 1996 is primarily
attributable to the one-time gain in 1996 on the sale of the stock of WWC of
approximately $22.8 million, partially offset by the recognition of
approximately $5.4 million in income resulting from the sale of TCS.
Recently Issued Accounting Standards
In June, 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative
Instruments and Hedging Activities". SFAS No. 133 establishes accounting and
reporting standards for derivative instruments and for hedging activities,
requiring the recognition of all derivatives as either assets or liabilities and
to measure those instruments at fair value, as well as to identify the
conditions for which a derivative may be specifically designed as a hedge. SFAS
No. 133 is effective for fiscal years beginning after June 15, 1999. Registrant
is still evaluating what effect, if any, SFAS No. 133 will have on the results
of operations and financial position of Registrant.
Forward Looking Information
In addition to historical information contained or incorporated by reference in
this report on Form 10-K, Registrant may make or publish forward-looking
statements about management expectations, strategic objectives, business
prospects, anticipated financial performance, and other similar matters. In
order to comply with the terms of the safe harbor for such statements provided
by the Private Securities Litigation Reform Act of 1995, Registrant notes that a
variety of factors, many of which are beyond its control, affect its operations,
performance, business strategy, and results and could cause actual results and
experience to differ materially from the expectations expressed in these
statements. These factors include, but are not limited to, the effect of
changing economic and market conditions, trends in business and finance and in
investor sentiment, the level of volatility of interest rates, the impact of
current, pending, and future legislation and regulation both in the United
States and throughout the world, and the other risks and uncertainties detailed
in this Form 10-K. Registrant undertakes no responsibility to update publicly or
revise any forward-looking statements.
Year 2000 Compliance Initiative
The year 2000 ("Y2K") problem is the result of a widespread programming
technique that causes computer systems to identify a date based on the last two
numbers of a year, with the assumption that the first two numbers of the year
are "19". As a result, the year 2000 would be stored as "00", causing computers
to incorrectly interpret the year as 1900. Left uncorrected, the Y2K problem may
cause information technology systems (e.g., computer databases) and
non-information technology systems (e.g., elevators) to produce incorrect data
or cease operating completely.
Overall, Registrant believes that it has identified and evaluated its internal
Y2K problem and that it is devoting sufficient resources to renovating
technology systems that are not already Y2K compliant. Registrant has been
working with third-party software vendors to ensure that computer programs
utilized by Registrant are Y2K compliant. In addition, Registrant has contacted
third parties to ascertain whether these entities are addressing the Y2K issue
within their own operation.
The General Partner, through MLOM is responsible for providing administrative
and accounting services necessary to support Registrant's operations, including
maintenance of the books and records, maintenance of the partner database,
issuance of financial reports and tax information to partners and processing
distribution payments to partners. In 1995, Merrill Lynch established the Year
2000 Compliance Initiative, which is an enterprisewide effort (of which MLOM is
a part) to address the risks associated with the Y2K problem, both internal and
external. The integration testing phase, which will occur throughout 1999,
validates that a system can successfully interface with both internal and
external systems. Merrill Lynch continues to survey and communicate with third
parties whose Year 2000 readiness is important to the company. Based on the
nature of the response and the importance of the product or service involved,
Merrill Lynch determines if additional testing is needed.
Merrill Lynch will participate in further industrywide testing currently
scheduled for March and April 1999, which will involve an expanded number of
firms, transactions, and conditions.
Although Registrant has not finally determined the cost associated with its Year
2000 readiness efforts, Registrant does not anticipate the cost of the Y2K
problem to be material to its business, financial condition or results of
operations in any given year. However, there can be no guarantee that the
systems of other companies on which Registrant's systems rely will be timely
converted, or that a failure to convert by another company or a conversion that
is incompatible with Registrant's systems would not have a material adverse
effect on Registrant's business, financial condition or results of operations.
Item 7A. Quantitative and Qualitative Disclosure About Market
Risk
As of December 31, 1998, Registrant maintains a portion of its cash equivalents
in financial instruments with original maturities of three months or less. These
financial instruments are subject to interest rate risk, and will decline in
value if interest rates increase. A significant increase or decrease in interest
rates would not have a material effect on Registrant's financial position.
<PAGE>
Item 8. Financial Statements and Supplementary Data.
TABLE OF CONTENTS
ML Media Opportunity Partners, L.P.
Independent Auditors' Report
Consolidated Balance Sheets as of December 31, 1998 and 1997
Consolidated Statements of Operations
for the three years ended December 31, 1998
Consolidated Statements of Cash Flows
for the three years ended December 31, 1998
Consolidated Statements of Changes in Partners' Capital/(Deficit)
for the three years ended December 31, 1998
Notes to Consolidated Financial Statements
for the three years ended December 31, 1998
No financial statement schedules are included because of the absence of the
conditions under which they are required or because the information is included
in the financial statements or the notes thereto.
<PAGE>
INDEPENDENT AUDITORS' REPORT
ML Media Opportunity Partners, L.P.:
We have audited the accompanying consolidated financial statements of ML Media
Opportunity Partners, L.P. (the "Partnership") and its affiliated entities, as
listed in the accompanying table of contents. These consolidated financial
statements are the responsibility of the Partnership's general partner. Our
responsibility is to express an opinion on the consolidated financial statements
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by the
general partner, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of the Partnership and its affiliated
entities as of December 31, 1998 and 1997, and the results of their operations
and their cash flows for each of the three years in the period ended December
31, 1998 in conformity with generally accepted accounting principles.
/s/ Deloitte & Touche LLP
New York, New York
March 12, 1999
<PAGE>
ML MEDIA OPPORTUNITY PARTNERS, L.P.
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 1998 AND 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
Notes 1998 1997
----- ---- ----
ASSETS:
Cash and cash equivalents $ 10,152,858 $ 13,324,291
Interest and other receivables 37,403 36,836
Other assets 89,191 -
------------- -------------
TOTAL ASSETS $ 10,279,452 $ 13,361,127
============= =============
LIABILITIES AND PARTNERS' CAPITAL:
Liabilities:
Accounts payable and accrued liabilities $ 2,071,911 $ 6,396,354
------------- -------------
Total Liabilities 2,071,911 6,396,354
------------- -------------
Commitments and contingencies 2,6
</TABLE>
(Continued on the following page.)
<PAGE>
ML MEDIA OPPORTUNITY PARTNERS, L.P.
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 1998 AND 1997
(continued)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
Notes 1998 1997
----- ---- ----
Partners' Capital:
General Partner:
Capital contributions, net of offering expenses 1,019,428 1,019,428
Additional capital contributions 2 29,573,143 27,759,183
Transfer from General Partner to Limited partners 2 (29,514,131) (27,718,311)
Cumulative cash distributions (362,496) (362,496)
Cumulative loss (613,376) (607,664)
------------ ------------
102,568 90,140
------------ ------------
Limited partners:
Capital contributions, net of offering expenses
(112,147.1 Units of Limited Partnership Interest) 100,914,316 100,914,316
Transfer from General Partner to Limited partners 2 29,514,131 27,718,311
Tax allowance cash distribution (2,040,121) (2,040,121)
Other cumulative cash distributions 2 (59,559,029) (59,559,029)
Cumulative loss (60,724,324) (60,158,844)
------------ ------------
8,104,973 6,874,633
------------ ------------
Total Partners' Capital 8,207,541 6,964,773
------------ ------------
TOTAL LIABILITIES AND PARTNERS' CAPITAL $ 10,279,452 $ 13,361,127
============ ============
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>
ML MEDIA OPPORTUNITY PARTNERS, L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE YEARS ENDED DECEMBER 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
1998 1997 1996
---- ---- ----
Interest income $ 339,093 $ 260,438 $ 290,820
Other income - 170,718 555,489
Income from TCS 1,135,371 - -
Gain on Sale of:
MVT - 481,200 -
IMP/Intelidata - 159,901 -
Western Wireless Corporation stock - - 22,843,249
----------- ----------- -----------
1,474,464 1,072,257 23,689,558
----------- ----------- -----------
Partnership Operating Expenses:
Professional fees
and other 231,696 197,765 111,503
Services provided by the
General Partner 1,813,960 1,869,597 2,144,597
----------- ----------- -----------
2,045,656 2,067,362 2,256,100
----------- ----------- -----------
(Loss)/Income from Partnership
operations (571,192) (995,105) 21,433,458
----------- ----------- -----------
Discontinued operations:
Income from Discontinued operations of:
Production Segment - - 81,799
Television and Radio Station Segment - 5,359,986 -
----------- ----------- -----------
</TABLE>
(Continued on the following page.)
<PAGE>
ML MEDIA OPPORTUNITY PARTNERS, L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE YEARS ENDED DECEMBER 31, 1998
(continued)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
1998 1997 1996
---- ---- ----
Income from discontinued operations - 5,359,986 81,799
----------- ------------ ------------
NET (LOSS)/INCOME $ (571,192) $ 4,364,881 $ 21,515,257
=========== ============ ============
Per Unit of Limited Partnership Interest:
(Loss)/Income from Partnership operations $ (5.04) $ (8.78) $ 189.21
Income from discontinued operations - 47.31 .72
----------- ------------ ------------
NET (LOSS)/INCOME $ (5.04) $ 38.53 $ 189.93
=========== ============ ============
Number of Units 112,147.1 112,147.1 112,147.1
=========== ============ ============
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>
ML MEDIA OPPORTUNITY PARTNERS, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE YEARS ENDED DECEMBER 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
1998 1997 1996
---- ---- ----
Cash flows from operating activities:
Net (loss)/income $ (571,192) $ 4,364,881 $ 21,515,257
Adjustments to reconcile net (loss)/income
to net cash (used in)/provided by
operating activities:
Services provided by
the General Partner 1,813,960 1,869,597 -
Income from TCS (1,135,371) - -
Income from
discontinued operations - (5,359,986) -
Gain on sale of MVT - (481,200) -
Gain on sale of
IMP/Intelidata - (159,901) -
Gain on sale of
Western Wireless
Corporation stock - - (22,843,249)
</TABLE>
(Continued on the following page.)
<PAGE>
ML MEDIA OPPORTUNITY PARTNERS, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE YEARS ENDED DECEMBER 31, 1998
(continued)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
1998 1997 1996
---- ---- ----
Changes in operating assets and liabilities:
Accounts payable and
accrued liabilities (4,235,252) 4,724,900 120,309
Interest and other
receivables (567) (32,619) (2,904)
Other assets (89,191) - 86,041
Management fee payable - - 2,144,597
Change in Net Liabilities
of Discontinued Operations
- Production Segment - (58,912) (81,799)
------------ ----------- ----------
Net cash (used in)/provided
by operating activities (4,217,613) 4,866,760 938,252
------------ ----------- ----------
</TABLE>
(Continued on the following page.)
<PAGE>
ML MEDIA OPPORTUNITY PARTNERS, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE YEARS ENDED DECEMBER 31, 1998
(continued)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
1998 1997 1996
---- ---- ----
Cash flows from investing activities:
Proceeds from disposition
of discontinued operations 1,046,180 5,359,986 -
Net proceeds from
sale of Western Wireless
Corporation stock - - 24,147,088
Proceeds from sale of MVT - 481,200 -
Proceeds from sale of IMPLP/Intelidata
- 159,901 -
------------ ----------- -----------
Net cash provided by
investing activities 1,046,180 6,001,087 24,147,088
</TABLE>
(Continued on the following page.)
<PAGE>
ML MEDIA OPPORTUNITY PARTNERS, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE YEARS ENDED DECEMBER 31, 1998
(continued)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
1998 1997 1996
---- ---- ----
Cash flows from financing
activities:
Additional capital contributions - 23,744,989 -
Cash distributions - (23,671,989) (24,241,877)
------------- ------------ ------------
Net cash provided - 73,000 (24,241,877)
by/(used in) financing
activities
------------- ------------ ------------
Net (decrease)/increase
in cash and cash equivalents (3,171,433) 10,940,847 843,463
Cash and cash equivalents
at beginning of year 13,324,291 2,383,444 1,539,981
------------- ------------ ------------
Cash and cash equivalents
at end of year $ 10,152,858 $ 13,324,291 $ 2,383,444
============= ============ ============
Cash paid for interest
by TCS $ 1,280,539 $ 2,290,177 $ 1,269,914
============= ============ ============
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>
ML MEDIA OPPORTUNITY PARTNERS, L.P.
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' CAPITAL/(DEFICIT)
FOR THE THREE YEARS ENDED DECEMBER 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
General Partner Limited Partners Total
--------------- ---------------- -------------
1996:
- ----
Partners' Capital
as of January 1, 1996 $ 32,885 $ 1,206,433 $ 1,239,318
Net Income 215,153 21,300,104 21,515,257
Cash Distribution (242,419) (23,999,458) (24,241,877)
-------------- --------------- --------------
Partners' Capital/(Deficit)
as of December 31, 1996 5,619 (1,492,921) (1,487,302)
1997:
- ----
Net Income 43,649 4,321,232 4,364,881
Additional capital contributions
27,759,183 - 27,759,183
Transfer from General Partner to Limited
Partners (27,718,311) 27,718,311 -
Cash Distribution - (23,671,989) (23,671,989)
-------------- --------------- --------------
Partners' Capital as of
December 31, 1997 90,140 6,874,633 6,964,773
1998:
Net Loss (5,712) (565,480) (571,192)
Additional capital contribution 1,813,960 - 1,813,960
Transfer from General Partner to Limited
Partners (1,795,820) 1,795,820 -
-------------- --------------- --------------
Partners' Capital
as of December 31, 1998 $ 102,568 $ 8,104,973 $ 8,207,541
=============== =============== ==============
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>
ML MEDIA OPPORTUNITY PARTNERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE YEARS ENDED DECEMBER 31, 1998
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
ML Media Opportunity Partners, L.P. (the "Partnership") was formed and the
Certificate of Limited Partnership was filed under the Delaware Revised Uniform
Limited Partnership Act on June 23, 1987. Operations commenced on March 23, 1988
with the first closing of the sale of units of limited partnership interest
("Units"). Subscriptions for an aggregate of 112,147.1 Units were accepted and
are now outstanding.
Media Opportunity Management Partners (the "General Partner") is a joint
venture, organized as a general partnership under the laws of the State of New
York, between RP Opportunity Management, L.P. ("RPOM"), a limited partnership
under Delaware law, and ML Opportunity Management Inc. ("MLOM"), a Delaware
corporation and an indirect wholly-owned subsidiary of Merrill Lynch & Co., Inc.
The General Partner was formed for the purpose of acting as general partner of
the Partnership. The General Partner's total initial capital contribution
amounted to $1,132,800 which represents 1% of the total Partnership capital
contributions.
Pursuant to the terms of the Amended and Restated Agreement of Limited
Partnership (the "Partnership Agreement"), the General Partner is liable for all
general obligations of the Partnership to the extent not paid by the
Partnership. The limited partners are not liable for the obligations of the
Partnership in excess of the amount of their contributed capital.
The Partnership was formed to acquire, finance, hold, develop, improve,
maintain, operate, lease, sell, exchange, dispose of and otherwise invest in and
deal with Media Businesses and direct and indirect interests therein. As of
September 22, 1997, with the closing of the sale of MV Technology Limited
("MVT"), the Partnership disposed of its last Media Business (as defined in the
Partnership Agreement). As a result, as of September 22, 1998 (one year
following the disposition of its last Media Business), pursuant to the
Partnership Agreement, the Partnership is in dissolution and its only remaining
activity is to wind up its affairs, which includes providing for or resolving
its remaining obligations and contingencies, and making a final cash
distribution, if any, to its partners.
<PAGE>
Reclassifications
Certain reclassifications were made to the 1996 financial statements to conform
with the current period's presentation.
Basis of Accounting and Fiscal Year
The Partnership's records are maintained on the accrual basis of accounting for
financial reporting and tax purposes. Prior to their dispositions, MVT and
General Cellular Corporation ("GCC")/Western Wireless Corporation ("WWC") were
accounted for on the cost method of accounting. The fiscal year of the
Partnership is the calendar year.
See Note 3 regarding discontinued operations.
Fair Value of Financial Instruments
Statement of Financial Accounting Standards ("SFAS") No. 107, "Disclosures about
Fair Value of Financial Instruments", requires companies to report the fair
value of certain on- and off-balance sheet assets and liabilities which are
defined as financial instruments.
Considerable judgment is required in interpreting data to develop the estimates
of fair value. Accordingly, the estimates presented herein are not necessarily
indicative of the amounts that the Partnership could realize in a current market
exchange. The use of different market assumptions and/or estimation
methodologies may have a material effect on the estimated fair value amounts.
Assets, including cash and cash equivalents and accounts receivable and
liabilities, such as trade payables, are carried at amounts which approximate
fair value.
Management Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities as of the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Income Taxes
The Partnership accounts for income taxes pursuant to SFAS No. 109 "Accounting
for Income Taxes". No provision for income taxes has been made for the
Partnership because all income and losses are allocated to the partners for
inclusion in their respective tax returns.
Recently Issued Accounting Standards
In June, 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities". SFAS No. 133
establishes accounting and reporting standards for derivative instruments and
for hedging activities, requiring the recognition of all derivatives as either
assets or liabilities and to measure those instruments at fair value, as well as
to identify the conditions for which a derivative may be specifically designed
as a hedge. SFAS No. 133 is effective for fiscal years beginning after June 15,
1999. The Partnership is still evaluating what effect, if any, SFAS No. 133 will
be on the results of operations and financial position of the Partnership .
Cash Equivalents
Short-term investments which have an original maturity of ninety days or less
are considered cash equivalents.
2. Liquidity and Summary of Investment Status
As of December 31, 1998 and 1997 the Partnership had $10,152,858 and $13,324,291
in cash and cash equivalents.
As of September 22, 1998 (one year following the disposition of its last Media
Business), pursuant to the Partnership Agreement, the Partnership is in
dissolution and its only remaining activity is to wind up its affairs, which
includes providing for or resolving its remaining obligations and contingencies
(see below), and making a final cash distribution, if any, to its partners.
During 1998, the General Partner continued to work to resolve the Partnership's
obligations and contingencies relating to its former investments. As of December
31, 1998, these obligations and contingencies amounted to approximately $1.6
million, in the aggregate, and are recorded as a liability in the financial
statements of the Partnership. The General Partner is working diligently to
resolve these obligations and contingencies as soon as practicable.
The General Partner currently anticipates that the pendency of such litigation,
as described below, related claims against the Partnership for indemnification,
other costs and expenses related to such litigation, and the involvement of
management, will adversely affect (a) the timing of the termination of the
Partnership, (b) the amount of proceeds which may be available for distribution,
and (c) the timing of the distribution to limited partners of any net proceeds
that remain after resolving such obligations and contingencies.
On March 27, 1997, the Partnership received a voluntary cash payment of
$23,671,989 (the "Cash Payment") from Merrill Lynch, Pierce, Fenner & Smith
Incorporated ("Merrill Lynch"), an affiliate of the General Partner, for
distribution solely to limited partners. Pursuant to an amendment to the
Partnership Agreement dated March 24, 1997 (the "Amendment"), the Cash Payment
was distributable solely to limited partners. On April 2, 1997, the Partnership
distributed all the proceeds of the Cash Payment, or $211.08 per $1,000 limited
partnership unit ("Unit"), to limited partners of record as of March 24, 1997.
The Cash Payment was treated in the accompanying financial statements as a
capital contribution by the General Partner and a simultaneous transfer to
limited partners' capital.
Also, pursuant to the Amendment, the Partnership's obligation to pay a
Partnership Management Fee and a Property Management Fee for 1996 and subsequent
periods was terminated. Therefore, although the General Partner continues to
provide services on behalf of the Partnership, the Partnership did not pay for
these services and will not pay for such services in the future. However, in
accordance with generally accepted accounting principles, for financial
reporting purposes, amounts equal to these services for 1998 and 1997 of
$1,813,960 and $1,869,597, respectively, have been treated in the accompanying
statements of operations as an expense with a corresponding increase in General
Partner's capital due to the capital contributions for services provided by the
General Partner. Similarly, an amount representing these services for 1996 of
$2,144,597 was treated as an increase in General Partner's capital and a
reduction of management fee payable in the Partnership's first quarter 1997
financial statements. In conjunction with the General Partner's capital
increase, a transfer was made to the limited partners' capital in an aggregate
amount of $1,795,820 and $3,974,052 during 1998 and 1997, respectively, which
represents the limited partners' share (99%) of the capital contribution of such
services. The foregoing expense and capital transfer have no effect on the
capital of the limited partners or the General Partner.
In addition, in 1997, Merrill Lynch paid for certain expenses of $73,000 on
behalf of the Partnership which were incurred by the Partnership in 1996. In
accordance with generally accepted accounting principles, for financial
reporting purposes, such amount was treated in the 1996 statement of operations
as an expense of the Partnership and, when payment was made in 1997, as an
increase in General Partner's capital. Simultaneously with the payment, a
transfer was made to the limited partners' capital in an amount of $72,270,
which represents the limited partners' share (99%) of the amount of such
expenses. The foregoing capital transactions increased capital of the General
Partner and the limited partners in an amount corresponding to the decreases to
capital recorded for such expenses in 1996. Thus, there was no effect on the
General Partner or the limited partners' capital.
TCS Television Partners, L.P.
On September 15, 1995, TCS Television Inc. ("TCS Inc.") completed the sale
to The Spartan Radiocasting Company ("Spartan") of all of the outstanding
capital stock of Avant Development Corporation ("Avant"), a 100% owned corporate
subsidiary of TCS Inc., which owned WRBL-TV, for a net sales price of $22.7
million. From the proceeds of the sale, a reserve of approximately $1.4 million
was established to cover certain expenses and liabilities relating to the sale
and $1,250,000 was deposited into an indemnity escrow account to secure TCS
Inc.'s indemnification obligations to Spartan for taxes and other liabilities.
In addition, approximately $18.9 million was applied to repay a portion of TCS
Television Partners, L.P.'s ("TCS") total indebtedness, which was secured by a
pledge of the shares of Fabri Development Corporation ("Fabri"). Approximately
$1.1 million was applied to closing costs. The Partnership recognized a gain,
for financial reporting purposes, on the sale of Avant of approximately $17.6
million, partially offset by a reserve for estimated losses on such future sale
of the remaining television stations of TCS of approximately $9.9 million.
During 1997 and 1998, $1 million plus accrued interest of approximately $74,000
and $250,000 plus accrued interest of approximately $54,000, respectively, were
returned to TCS from the indemnity escrow relating to the sale of Avant. In
addition, during 1998, $176,000 of a final working capital adjustment relating
to the sale of Avant was received by TCS.
TCS entered into an agreement (the "Sub-Debt Proceeds Sharing Agreement") dated
September 17, 1996, with the holders of its subordinated debt under which the
lenders agreed that TCS would be entitled to share in the net proceeds of the
sale of such TCS stations in accordance with a formula set forth in such
agreement.
On April 15, 1997, TCS and TCS Inc. (jointly, the "Sellers"), completed the sale
to Nexstar Broadcasting Group, L.L.C., ("Nexstar") of all of the outstanding
capital stock of Fabri.
<PAGE>
Fabri, a 100% owned corporate subsidiary of TCS Inc., owned two television
stations, WTWO-TV in Terre Haute, Indiana and KQTV in St. Joseph, Missouri.
Before the consummation of the sale, Nexstar assigned its rights under the Stock
Purchase Agreement (the "Stock Purchase Agreement") to Nexstar Broadcasting of
the Midwest Inc. The base purchase price for the outstanding shares of Fabri was
$31,323,922 after a working capital adjustment. Pursuant to the terms of the
Stock Purchase Agreement and the Sub-Debt Proceeds Sharing Agreement, after
application of the proceeds generated by the sale to the payment of transaction
expenses resulting from the sale and to the establishment of two separate escrow
accounts totaling $1,750,000 (the entire escrowed amount), the remaining
proceeds received from the sale were applied as follows: $23,757,072 to repay
certain amounts to TCS's lenders; $1,022,534 to repay outstanding principal and
accrued interest on a loan made to TCS by the Partnership; and $2,604,601 and
$1,736,400 to pay the Partnership and Commonwealth Capital Partners, L.P.
("Commonwealth"), respectively, their share of certain accrued and unpaid
consulting fees. During 1997 and early 1998, $1,750,000 (the entire escrowed
amount) plus accrued interest of approximately $63,000 was returned to TCS from
escrows related to the sale of Fabri.
In 1998, from the cumulative amount of proceeds from the sale of both Avant
and Fabri, including released escrowed funds, TCS paid its lenders approximately
$1,280,000 and paid approximately $656,000 toward accrued expenses. In addition,
TCS paid $1,929,707 and $1,286,472 to the Partnership and Commonwealth,
respectively, representing their share of certain accrued and unpaid consulting
fees, and paid $748,292 each to the Partnership and Commonwealth representing
their share of the net proceeds. The Partnership still has an interest in the
remaining net assets of TCS (approximately $100,000), which is consolidated into
the Partnership's financial statements as of December 31, 1998. The Partnership
recorded income of $1,135,371 and $5,359,986 during 1998 and 1997, respectively,
related to the sale of TCS.
Investments and EMP, Ltd. and MVT
Effective August 12, 1994, the Partnership owned 13.8% of the issued common
shares of MVT, while European Media Partners, Ltd. ("EMP") owned the remaining
86.2%. MVT's purpose was to manage its sole asset, a 10% interest in Teletext, a
United Kingdom corporation organized to acquire United Kingdom franchising
rights to provide data in text form to television viewers via television
broadcast sidebands. The Partnership had held an indirect 1.38% interest in
Teletext. MVT paid an annual fee to EMP for management services provided by EMP
in connection with overseeing MVT's investment in Teletext. Following the
restructuring, the Partnership no longer had any interest in EMP.
In January, 1996, EMP exercised its right to require the Partnership to sell its
interest in MVT to EMP and notified the Partnership of its intention to acquire
the Partnership's interest. On September 22, 1997, the Partnership, pursuant to
the option exercised by EMP, completed the sale of its remaining investment, a
restructured 13.8% ownership interest in MVT and recorded a gain on the sale of
approximately $481,000. In addition, during 1996, the Partnership received
approximately $87,000 in dividends from MVT.
Sale of Windsor Systems
On May 18, 1994, the Partnership sold the assets of its cable television systems
in North Carolina (the "Windsor Systems") for $3,443,200, subject to
post-closing adjustments. At closing, the Partnership repaid the $2,050,058 of
principal and interest then due under a seller note used in financing the
original purchase of the Windsor Systems (the "Windsor Note"), as required by
the terms of the Windsor Note. In addition, as required by the asset purchase
agreement, at closing, $342,160 (the "Escrowed Monies") was placed into two
separate escrow accounts to cover the potential costs of improving pole
attachments and other possible post-closing expenses. The remaining $1,050,982
in sales proceeds was applied or reserved to pay closing costs of the
transaction and certain pre-closing liabilities to third parties other than the
buyer. As of December 31, 1998, such obligations are reflected as liabilities in
the Consolidated Balance Sheet.
On August 29, 1996, approximately $190,000 was received by the Partnership as
final settlement for post-closing adjustments related to the sale of the Windsor
Systems. As of September 30, 1996, Escrowed Monies of approximately $279,000
plus approximately $34,000 of interest was received by the Partnership in full
settlement of the post-closing expense escrow. In addition, Escrowed Monies of
approximately $63,000 plus approximately $8,000 of interest was distributed to
the buyer in full settlement of the pole attachment escrow. As of December 31,
1996, no further amounts related to the Windsor Systems remain in escrow.
The Partnership recognized a gain of approximately $469,000 in 1996 for
settlement of Escrowed Monies and post-closing adjustments related to the sale
of the Windsor Systems.
Disposition of WWC
On May 29, 1996, the Partnership sold all of its 1,090,162 shares of WWC at a
price of $23.50 per share in an initial public offering of shares of common
stock of WWC. The 1,090,162 shares of WWC sold by the Partnership represented
all of the shares held by the Partnership, after giving effect to a 3.1 to 1
stock split immediately prior to the offering. As a result, on May 29, 1996, the
Partnership received $24,147,088 in net proceeds for its 1,090,162 shares, after
payment of underwriter's commission in connection with the sale. The Partnership
recognized a gain of approximately $22.8 million on the sale of its WWC stock.
On July 29, 1996, the Partnership made a cash distribution to limited partners
of record on May 31, 1996, of $214 per Unit totaling $23,999,458 and $242,419 to
the General Partner of net distributable sale proceeds from the sale of its
stock of WWC and the remaining interests in films and other projects developed
by Paradigm Entertainment, L.P. ("Paradigm") (see below).
Disposition of IMPLP/IMPI and Intelidata
Effective July 1, 1993, the Partnership entered into three transactions to sell
the business and assets of International Media Publishing, L.P. ("IMPLP") and
its wholly owned subsidiary International Media Publishing, Inc. ("IMPI") and
Intelidata Limited ("Intelidata"). In two separate transactions, the Partnership
sold the entire business and substantially all of the assets of IMPLP/IMPI and a
portion of the business and assets of Intelidata to Phillips Business
Information, Inc. ("PBI") for future consideration based on the revenues of
IMPLP/IMPI and the portion of the Intelidata business acquired by PBI. At
closing, PBI made advances of $100,000 and $150,000 to IMPLP/IMPI and
Intelidata, respectively, which advances would be recoverable by PBI from any
future consideration payable by PBI to the Partnership. In addition, PBI agreed
to assume certain liabilities of IMPLP/IMPI and Intelidata.
In a third transaction, the Partnership sold the remaining business and assets
of Intelidata, which were not sold to PBI, to Romtec plc. ("Romtec") in exchange
for future consideration, based on both the amount of assets and liabilities
transferred to Romtec and the combined profits of the portion of the Intelidata
business acquired by Romtec and another, existing division of Romtec. In
addition, certain liabilities of Intelidata were assumed by Romtec. During 1997,
it was determined that no consideration would be payable from the sale to
Romtec. As a result of the above activity, the Partnership has no remaining
interests in IMP/Intelidata.
Subsequent to the sale of the businesses, the Partnership advanced net
additional funds totaling approximately $120,000 through December 31, 1998 to
IMPLP/IMPI and Intelidata to fund cash shortfalls resulting from the pre-sale
claims of certain creditors. The Partnership anticipates that it will make
additional such advances to IMPLP/IMPI and Intelidata during 1999. These
obligations are reflected as a liability in the Partnership's Consolidated
Balance Sheet as of December 31, 1998.
On August 27, 1997, the Partnership received and recognized a gain for financial
reporting purposes of approximately $160,000 representing the final deferred
sale payment arising from the July 1, 1993 sale of its interest in IMPLP and
Intelidata. These funds represented the contractual royalty fee for sales
generated by Intelidata since the 1993 sale.
Paradigm/BBAD
During 1996, the Partnership received $135,000 from Paradigm's sale of the
Partnership's remaining interests in the films and other projects developed by
Paradigm. The Partnership recognized a gain for financial reporting purposes of
$135,000 on the sale of the films and other projects in 1996, offset by
operational losses of $53,201. Although the Partnership is no longer advancing
funds for continuing operations and Paradigm has no operating assets, the
Partnership is liable for certain liabilities of Paradigm. These liabilities are
reflected in the Consolidated Balance Sheet as of December 31, 1998.
3. DISCONTINUED OPERATIONS
Production Segment
Although the Partnership disposed of its remaining interest in films and other
projects owned by Paradigm in 1996, the Partnership is liable for certain
liabilities of Paradigm. As of December 31, 1998, the Partnership has
consolidated the remaining cash and liabilities of Paradigm.
During 1996, the Partnership's Production Segment was presented as discontinued
operations. In 1996, the Partnership recorded a gain of $135,000 on the sale of
films and other projects owned by Paradigm offset by operational losses of
$53,201 (see Note 2).
<PAGE>
Summarized results of the discontinued operations of the Production Segment on
the Consolidated Statements of Operations for the year ended December 31, 1996
are as follows:
<TABLE>
<S> <C>
Operating Revenues $ 158,468
Less: Operating Expenses 59,956
------------
Operating Income 98,512
Minority Interest (16,713)
------------
Income from discontinued operations $ 81,799
============
</TABLE>
Television and Radio Station Segment
During 1997, the Partnership disposed of its remaining two operating properties
in the Television and Radio Station Segment and recorded income of $5,359,986.
The Partnership still retains an interest in the remaining assets of TCS (see
Note 2). During 1996, the Partnership presented its Television and Radio Station
Segment as discontinued operations.
4. TRANSACTIONS WITH THE GENERAL PARTNER AND ITS AFFILIATES
During the three years ended December 31, 1998, the General Partner provided the
following services to the Partnership:
<TABLE>
<S> <C> <C> <C>
For the Year Ended For the Year Ended For the Year Ended
December 31, 1998 December 31, 1997 December 31, 1996
------------------ ------------------ ------------------
Media Opportunity Management
Partners (General Partner):
Partnership Management Fee $ 959,428 $ 943,391 $ 913,253
Property Management Fee 854,532 926,206 1,231,344
---------------- ---------------- ----------------
$ 1,813,960 $ 1,869,597 $ 2,144,597
================ ================ ================
</TABLE>
<PAGE>
During the first quarter of 1997, the Partnership's obligation to pay a
management fee as of December 31, 1996 and thereafter was terminated. The
Partnership did not pay the General Partner a management fee for 1996, 1997 or
1998 (see Note 2).
In addition, RP Television, an affiliate of the General Partner, provided
certain administrative and accounting services to the television stations owned
by TCS. The television stations paid for these services at cost. The reimbursed
cost incurred by RP Television on behalf of TCS totaled approximately $235,000,
$109,000 and $238,000 for 1998, 1997 and 1996, respectively. These reimbursed
costs are included in the Consolidated Statements of Operations.
5. ACCOUNTING FOR INCOME TAXES
Certain entities owned by the Partnership were taxable entities and thus were
required under SFAS No. 109 to recognize deferred income taxes. During 1997, the
Partnership disposed of its last taxable entity. Therefore, as of December 31,
1998, the only entities remaining are classified as partnerships for tax
purposes. Hence, all items of income and deductions at the Partnership level
will flow up to the partners of the Partnership and there will be no income tax
liability imposed at the Partnership level. Additionally, since all the taxable
entities have been liquidated, there is no deferred tax asset or liability as of
December 31, 1998 and as of December 31, 1997.
<PAGE>
For the Partnership, the differences between the tax basis of assets and
liabilities and the reported amounts are as follows:
<TABLE>
<S> <C> <C>
As of As of
December 31, 1998 December 31, 1997
----------------- -----------------
Partners' Capital - financial statements
$ 8,207,541 $ 6,964,773
Differences:
Offering expenses 11,346,156 11,346,156
Basis of property, plant and equipment and intangible
assets 4,206,605 4,206,605
Cumulative income of stock investments (corporations) (12,732,333) (12,542,110)
Management fees 4,176,677 4,176,677
Other 7,570,603 6,425,298
---------------- ----------------
Partners' Capital - income tax bases $ 22,775,249 $ 20,577,399
================ ================
</TABLE>
<PAGE>
6. CONTINGENCIES
On August 29, 1997, a purported class action was commenced in New York Supreme
Court, New York County, on behalf of the limited partners of the Partnership,
against the Partnership, the General Partner, the General Partner's two
partners, MLOM and RPOM, Merrill Lynch & Co., Inc. and Merrill Lynch. The action
concerns the Partnership's payment of certain management fees and expenses to
the General Partner and the payment of certain purported fees to an affiliate of
RPOM.
Specifically, the plaintiffs allege breach of the Partnership Agreement, breach
of fiduciary duties and unjust enrichment by the General Partner in that the
General Partner allegedly: (1) improperly failed to return to plaintiffs and the
alleged class members certain uninvested capital contributions in the amount of
$18.5 million (less certain reserves), (2) improperly paid itself management
fees in the amount of $18.3 million, and (3) improperly paid MultiVision Cable
TV Corp., an affiliate of RPOM, supposedly duplicative management fees in an
amount in excess of $6 million. In addition, plaintiffs assert a claim for
quantum meruit, supposedly seeking credit for, and counsel fees based on, the
benefit received by the limited partners as a result of the voluntary payment
made by Merrill Lynch to the Partnership in March 1997, in the amount of
approximately $23 million, representing management fees, certain expenses, and
interest paid by the Partnership to the General Partner since 1990.
With respect to Merrill Lynch & Co., Inc., Merrill Lynch, MLOM and RPOM,
plaintiffs claim that these defendants aided and abetted the General Partner in
the alleged breach of the Partnership Agreement and in the alleged breach of the
General Partner's fiduciary duties. Plaintiffs seek, among other things, an
injunction barring defendants from paying themselves management fees or expenses
not expressly authorized by the Partnership Agreement, an accounting,
disgorgement of the alleged improperly paid fees and expenses, return of
uninvested capital contributions, counsel fees, and compensatory and punitive
damages. Defendants believe that they have good and meritorious defenses to the
action, and vigorously deny any wrongdoing with respect to the alleged claims.
Defendants moved to dismiss the complaint and each claim for relief therein. On
March 3, 1999, the New York Supreme Court issued an order granting the
Partnership's and co-defendants' motion and dismissing plaintiffs' complaint in
its entirety, principally on the ground that the claims are derivative and
plaintiffs lack standing to bring suit because they failed to make a
pre-litigation demand on the General Partner.
Plaintiffs' time to appeal has not yet expired.
The Partnership Agreement provides for indemnification, to the fullest extent
provided by law, for any person or entity named as a party to any threatened,
pending or completed lawsuit by reason of any alleged act or omission arising
out of such person's activities as a General Partner or as an officer, director
or affiliate of either RPOM, MLOM or the General Partner, subject to specified
conditions. In connection with the purported class action noted above, the
Partnership has received notices of requests for indemnification from the
following defendants named therein: the General Partner, MLOM, RPOM, Merrill
Lynch & Co., Inc., and Merrill Lynch. For the years ended December 31, 1998 and
1997, the Partnership incurred approximately $207,000 and $160,000,
respectively, for legal costs relating to such indemnification. Such cumulative
costs amount to approximately $367,000 through December 31, 1998.
<PAGE>
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure.
None.
<PAGE>
Part III.
Item 10. Directors and Executive Officers of the Registrant
Registrant has no executive officers or directors. The General Partner
manages Registrant's affairs and has general responsibility and authority in all
matters affecting its business. The responsibilities of the General Partner are
carried out either by executive officers of EHR Opportunity Management, Inc. and
IMP Opportunity Management, Inc. as general partners of RP Opportunity
Management, L.P. or executive officers of ML Opportunity Management Inc. acting
on behalf of the General Partner. The executive officers and directors of RP
Opportunity Management, L.P. and ML Opportunity Management Inc. are:
RP Opportunity Management, L.P. (the "Management Company or "RPOM")
<TABLE>
<S> <C> <C>
Served in
Present
Capacity
Name Since (1) Position Held
- -------------------- ----------- -------------------------------
I. Martin Pompadur 6/15/87 Director and President
IMP Opportunity Management, Inc.
Elizabeth McNey Yates 4/01/88 Executive Vice President
IMP Opportunity Management, Inc.
(1) The Director holds office until a successor is elected and qualified.
All executive officers serve at the pleasure of the Director.
</TABLE>
<PAGE>
ML Opportunity Management Inc. ("MLOM")
<TABLE>
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Served in Present
Name Capacity Since (1) Position Held
- ----------------------------- ------------------ --------------------------
Kevin K. Albert 2/19/91 President
6/22/87 Director
James V. Caruso 11/20/98 Director
12/30/98 Executive Vice President
David G. Cohen 11/20/98 Director
8/11/95 Vice President
Rosalie Y. Goldberg 11/20/98 Director
12/30/98 Vice President
Diane T. Herte (2) 12/30/98 Vice President
Robert J. Remick 12/30/98 Treasurer
(1) Directors hold office until their successors are elected and qualified.
All executive officers serve at the pleasure of the Board of Directors.
(2) Ms. Herte held the position of Treasurer from August 11, 1995 through December 29, 1998.
</TABLE>
<PAGE>
I. Martin Pompadur, 63, Director and President of RP Opportunity Management,
L.P. Mr. Pompadur is an Executive Vice President of News Corporation and
President of News Corporation-Eastern and Central Europe. Mr. Pompadur is also
the Chairman and Chief Executive Officer of GP Station Partners which is the
General Partner of Television Station Partners, L.P., a private limited
partnership that owned and operated four network affiliated television stations.
These stations were sold in January 1996 and this partnership is currently in
its liquidation phase. Mr. Pompadur is the Chairman and Chief Executive Officer
of PBTV, Inc., the Managing General Partner of Northeastern Television Investors
Limited Partnership, a private limited partnership which owned and operated
WBRE-TV, a network affiliated station in Wilkes-Barre/Scranton, Pennsylvania.
This station was sold in January 1998 and is currently in its liquidation phase.
Mr. Pompadur is also the President and a Director of RP Media Management
("RPMM"), a joint venture which is a partner in Media Management Partners, an
affiliate of the General Partner and the general partner of ML Media Partners,
L.P.("ML Media") which presently owns a cable television system and two radio
stations. Mr. Pompadur was the Principal Executive Officer and principal owner
of RP Radio Management Inc.("RP Radio"), a company owned principally by Mr.
Pompadur to provide administrative and day-to-day management services to ML
Media's radio properties. On December 27, 1997, RP Radio Management Inc. was
merged into RP Radio Management LLC, an entity wholly owned by ML Media. Mr.
Pompadur is also Chief Executive Officer of MultiVision Cable TV Corp.
("MultiVision"), a cable television multiple system operator organized in
January 1988 and owned principally by Mr. Pompadur and the estate of Elton H.
Rule to provide MSO services to cable television systems acquired by entities
under his control. Mr. Pompadur is a principal owner, member of the Board of
Directors and Secretary of Caribbean International News Corporation
("Caribbean"). Caribbean owns and publishes EL Vocero, the largest Spanish
language daily newspaper in the United States.
Elizabeth McNey Yates, 35, Executive Vice President of RP Opportunity
Management, L.P., joined RP Companies Inc., an entity controlled by Mr.
Pompadur, in March 1988 and has senior executive responsibilities in the areas
of finance, operations, administration, acquisitions and dispositions. Ms. Yates
is Chief Operating Officer and Executive Vice President of RP Companies, Inc.,
Executive Vice President of RPMM and Chief Operating Officer and Executive Vice
President of RP Radio. In addition, Ms Yates is the President and Chief
Operating Officer of MultiVision.
Kevin K. Albert, 46, a Managing Director of Merrill Lynch Investment Banking
Group ("ML Investment Banking"), joined Merrill Lynch in 1981. Mr. Albert works
in the Equity Private Placement Group and is involved in structuring and placing
a diversified array of private equity financing including common stock,
preferred stock, limited partnership interests and other equity-related
securities. Mr. Albert is also a director of ML Media Management Inc. ("ML
Media"), an affiliate of MLOM and a joint venturer of Media Management Partners,
the general partner of ML Media Partners, L.P.; a director of ML Mezzanine II
Inc. ("ML Mezzanine II"), an affiliate of MLOM and sole general partner of the
managing general partner of ML-Lee Acquisition Fund II, L.P. and ML-Lee
Acquisition Fund (Retirement Accounts) II, L.P.; a director of ML Mezzanine Inc.
("ML Mezzanine"), an affiliate of MLOM and the sole general partner of the
managing general partner of ML-Lee Acquisition Fund, L.P.; a director of Merrill
Lynch Venture Capital Inc. ("ML Venture"), an affiliate of MLOM and the general
partner of the Managing General Partner of ML Venture Partners II, L.P.
("Venture II") and ML Oklahoma Venture Partners Limited Partnership
("Oklahoma"); and a director of Merrill Lynch R&D Management Inc. ("ML R&D"), an
affiliate of MLOM and the general partner of the General Partner of ML
Technology Ventures, L.P. Mr. Albert also serves as an independent general
partner of Venture II.
James V. Caruso, 47, a Director of ML Investment Banking, joined Merrill Lynch
in 1975. Mr. Caruso manages the Investment Banking Group Corporate Accounting,
Master Lease and off Balance Sheet accounting functions as well as the
Controller's area of the Partnership Analysis and Finance Group. Mr. Caruso is
also a director of ML Media, ML Venture, ML R&D, ML Mezzanine, ML Mezzanine II
and MLH Property Managers Inc., an affiliate of MLOM and the general partner of
MLH Income Realty Partnership VI.
David G. Cohen, 36, a Vice President of ML Investment Banking, joined Merrill
Lynch in 1987. Mr. Cohen shares responsibility for the ongoing management of the
operations of various project related limited partnerships for which
subsidiaries of ML Leasing Equipment Corp., an affiliate of Merrill Lynch, are
general partners. Mr. Cohen is also a director of ML Media, ML Venture, and ML
R&D.
Rosalie Y. Goldberg, 61, a First Vice President and Senior Director of Merrill
Lynch's Private Client Group and the Director of its Special Investments Group.
Ms. Goldberg joined Merrill Lynch in 1975 and has held a number of management
positions in the Special Investments area, including the position of Manager for
Product Development and Origination from 1983 to 1989. Ms. Goldberg is also a
Director of ML Mezzanine, ML Mezzanine II, and ML Media.
Diane T. Herte, 38, a Vice President of ML Investment Banking since 1996 and
previously an Assistant Vice President of Merrill Lynch & Co. Corporate Credit
Group since 1992, joined Merrill Lynch in 1984. Ms. Herte's responsibilities
include controllership and financial management functions for certain
partnerships and other entities for which subsidiaries of Merrill Lynch are the
general partner, manager or administrator.
Robert J. Remick, 28, an Assistant Vice President of ML Investment Banking since
1996, joined Merrill Lynch in 1994. Mr. Remick's responsibilities include
controllership and financial management functions for certain partnerships and
other entities for which subsidiaries of Merrill Lynch are the general partner
or administrator.
Mr. Pompadur and Ms. Yates were each executive officers of Maryland Cable
Corp. and Maryland Cable Holdings Corp. at and during the two years prior to the
filing by both companies on March 10, 1994 of a consolidated plan of
reorganization under Chapter 11 of the United States Bankruptcy Code with the
United States Bankruptcy Court for the Southern District of New York. Maryland
Cable Holdings Corp. was at the time of such filing a subsidiary of Registrant.
An Investment Committee of Registrant was established to have the responsibility
and authority for developing, in conjunction with the Management Company,
diversification objectives for the investments to be made by Registrant, for
reviewing and approving each investment proposed by the Management Company for
Registrant and for evaluating and approving dispositions of investments of
Registrant. The Investment Committee will also establish reserves for Registrant
for such purposes and in such amounts as it deems appropriate. A simple majority
vote shall be required for any proposed investment or disposition. The
Investment Committee also has the responsibility and authority for monitoring
the management of the investments of Registrant by the Management Company.
The current members of the Investment Committee are as follows:
RPOM Representative MLOM Representatives
I. Martin Pompadur Kevin K. Albert
James V. Caruso
Item 11. Executive Compensation.
Registrant does not pay the executive officers or directors of the General
Partner any remuneration. The General Partner does not presently pay any
remuneration to any of its executive officers or directors. See Note 4 to the
Financial Statements included in Item 8 hereof, however, for amounts paid by
Registrant to the General Partner and its affiliates for the three years ended
December 31, 1998.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
As of February 10, 1999, no person was known by the Registrant to be the
beneficial owner of more than 5 percent of the Units.
To the knowledge of the General Partner, as of February 10, 1999, the officers
and directors of the General Partner in aggregate own less than 1% of the
outstanding common stock of Merrill Lynch & Co., Inc.
RP Opportunity Management, L.P. ("RPOM") is organized as a limited
partnership, the general partners of which are EHR Opportunity Management, Inc.,
and IMP Opportunity Management, Inc. IMP Opportunity Management, Inc. is
wholly-owned by Mr. I. Martin Pompadur and EHR Opportunity Management, Inc. is
wholly-owned by The Rule Trust.
Item 13. Certain Relationships and Related Transactions.
Refer to Note 4 to the Financial Statements included in Item 8 hereof, and in
Item 1 for a description of the relationship of the General Partner and its
affiliates to Registrant and its subsidiaries.
<PAGE>
Part IV.
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.
(a) Financial Statements, Financial Statement Schedules and Exhibits.
(1) Financial Statements
See Item 8. "Financial Statements and Supplementary Data."
(2) Financial Statement Schedules
No financial statement schedules are included because
of the absence of the conditions which require their
inclusion or because the required information is
included in the financial statement or set forth herein
the notes thereto.
(3) Exhibits
<TABLE>
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<S> <C> <C>
Exhibits Incorporated by Reference to
3.1 Certificate of Limited Partnership Exhibit 3.1 to Registrant's Form S-1 the
Registration Statement
(File No. 33-15502)
3.2 Amended and Restated Agreement of Limited Exhibit 3.2 to Registrant's Annual Report on Form
Partnership 10-K for the fiscal year ended December 31, 1987
(File No. 33-15502)
3.3 Amendment No. 1 to Amended and Restated Exhibit 3.3 to Registrant's Annual Report on Form
Agreement of Limited Partnership 10-K for the fiscal year ended December 31, 1996
(File No. 0-16690)
10.1.1 Exchange Agreement dated December 31, 1993 Exhibit 10.1 to Registrant's Form 8-K Report dated
January 12, 1994
(File No. 33-15502)
10.1.2 Consolidated Prepackaged Plan of Exhibit to Registrant's Form 8-K Report dated March
Reorganization of Maryland Cable Corp. and 10, 1994
Maryland Cable Holdings Corp. (File No. 33-15502)
10.1.3 Letter Agreement to Purchase and Sell all of Exhibit 10.1 to Registrant's Annual Report on Form
the Assets of the community antenna 10-K for the fiscal year ended December 31, 1988
television systems owned by Windsor (File No. 33-15502)
Cablevision, Inc. between Williamston Cable
Television, Inc. and Windsor Cablevision,
Inc. dated as of March 7, 1988
10.1.4 Agreement between TCS, Registrant, Exhibit 10.1 to Registrant's Form 8-K Report dated
Commonwealth Capital Partners, L.P., and December 14, 1992
other parties, dated December 14, 1992 (File No. 0-16690)
10.1.5 Management Agreement dated as of June 30, Exhibit 10.1.1 to Registrant's Annual Report on Form
1992 between ML Media Opportunity Partners, 10-K for the fiscal year ended December 31, 1992
L.P. and Cablevision Systems Corporation (File No. 0-16690)
10.2 Promissory Note from Williamston Cable Exhibit 10.2 to Registrant's Annual Report on Form
Television, Inc. to Windsor Cablevision, Inc. 10-K for the fiscal year ended December 31, 1988
(File No. 33-15502)
10.2.0 Services Agreement between Registrant, TCS Exhibit 10.2 to Registrant's Form 8-K Report
Management Corp., and Commonwealth Capital dated December 14, 1992
December 14, 1992 Partners, L.P., (File 0-16690)
10.2.1 Asset Purchase Agreement dated November 16, Exhibit 10.2.1 to Registrant's Quarterly Report on
1993 between Tar River Communications, Inc. Form 10-Q for the quarter ended September 30, 1993
and Registrant (File No. 0-16690)
10.3.1 Securities Purchase Agreement dated Exhibit 28.1 to Registrant's Quarterly Report on
May 13, 1988 relating to Prime Cable Form 10-Q for the quarter ended June 30, 1988
(File No. 0-16690)
10.3.2 Amendment No. 1 to Securities Purchase Exhibit 2(b) to Amendment No. 2 to the Registration
Agreement, dated as of October 21, 1988 Statement of Maryland Cable Corp.
(File No. 33-23679)
10.3.3 Amendment No. 2 to Securities Purchase Exhibit 2(c) to Maryland Cable Corp.'s Annual Report
Agreement, dated as of October 28, 1988 on Form 10-K for the fiscal year ended December 31,
1989 (File No. 33-23679)
10.3.4 Purchase and Sale Agreement dated January Exhibit 10.3.4 to Registrant's Annual Report on Form
22, 1993 between Maryland Cable Corp. and 10-K for the fiscal year ended December 31, 1992
Benchmark Acquisition Fund I Limited (File No. 0-16690)
Partnership
10.4 Credit Agreement dated November 4, 1988 Exhibit 28.2 to Registrant's Quarterly Report on
between Maryland Cable Corp., and Citibank, Form 10-Q for the quarter ended
N.A., as agent June 30, 1988
(File No. 0-16690)
10.5 Maryland Cable Corp. to Security Pacific Exhibit 4(a) to Maryland Cable Corp.'s Annual Report
National Trust Company (New York) Trustee - on Form 10-K for the fiscal year ended December 31,
Indenture Dated as of November 15, 1988 - 1989 (File No. 33-23679)
$162,406,000 Senior Subordinated Discount
Notes due 1988
10.6 Asset Purchase Agreement dated December 21, Exhibit 10.6 to Registrant's Annual Report on Form
1988 by and between CBN Continental 10-K for the fiscal year ended December 31, 1988
Broadcasting Network, Inc., and ML Media (File No. 33-15502)
Opportunity Partners, L.P.
10.7 Agency and Cost Allocation Agreement, as Exhibit 10(a) to Maryland Cable Corp.'s Annual
amended Report on Form 10-K for the fiscal year ended
December 31, 1989 (File No. 33-23679)
10.8 Fee Sharing Agreement between ML Media Exhibit 10(b) to Maryland Cable Corp.'s Annual
Opportunity Partners, L.P. and Maryland Report on Form 10-K for the fiscal year ended
Cable Corp. December 31, 1989 (File No. 33-23679)
10.9 Subordination Agreement by and among ML Exhibit 28(a) to Maryland Cable Corp.'s Annual
Media Opportunity Partners, L.P., Maryland Report on Form 10-K for the fiscal year ended
Cable Corp. and Security Pacific National December 31, 1989 (File No. 33-23679)
Trust Company (New York) as trustee
10.10.1 Guaranty of Cellular Holdings, Inc. dated Exhibit 10.10.1 to Registrant's Quarterly Report on
May 19, 1989 Form 10-Q for the quarter ended June 30, 1989
(File No. 0-16690)
10.10.2 Security and Pledge Agreement between Exhibit 10.10.2 to Registrant's Quarterly Report on
Cellular Holdings, Inc. and ML Media Form 10-Q for the quarter ended June 30, 1989
Opportunity Partners, L.P. dated as of May (File No. 0-16690)
19, 1989
10.10.3 Subscription and Purchase Agreement 666,667 Exhibit 10.10.3 to Registrant's Quarterly Report on
shares of Series A Convertible Preferred Form 10-Q for the quarter ended June 30, 1989
Stock of General Cellular Corp. Dated as of (File No. 0-16690)
May 19, 1989
10.10.4 Certificate of Designations, Preferences, Exhibit 10.10.4 to Registrant's Quarterly Report on
and Relative Rights of Series A Convertible Form 10-Q for the quarter ended June 30, 1989
Preferred Stock of General Cellular (File No. 0-16690)
Corporation
10.10.5 Registration Rights Agreement Dated as of Exhibit 10.10.5 to Registrant's Quarterly Report on
May 19, 1989 between General Cellular Corp. Form 10-Q for the quarter ended June 30, 1989
and ML Media Opportunity Partners, L.P. (File No. 0-16690)
10.11 Limited Partnership Agreement between Bob Exhibit 10.11 to Registrant's Quarterly Report on
Banner Associates, the Gary L. Pudney Co. Form 10-Q for the quarter ended June 30, 1989
and ML Media Opportunity Productions, Inc. (File No. 0-16690)
and ML Media Opportunity Partners, L.P.
10.12 Stockholders Agreement dated as of September Exhibit 10.12 to Registrant's Annual Report on Form
1, 1989 among Mediaventures International 10-K for the fiscal year ended December 31, 1991
Limited, ML Media Opportunity Partners, (File No. 0-16690)
L.P., Peter Clark and Alan Morris
10.13 Limited Partnership Agreement of European Exhibit 10.13 to Registrant's Annual Report on Form
Media Partners dated as of September 1, 1989 10-K for the fiscal year ended December 31, 1991
among Mediaventures Limited, ML Media (File No. 0-16690)
Opportunity Europe, Inc. and ML Media
Opportunity Partners, L.P.
10.14 Stock Purchase Agreement dated as of January Exhibit 10.14 to Registrant's Annual Report on Form
17, 1990 between Malcolm Glazer and TCS 10-K for the fiscal year ended December 31, 1991
Television Partners, L.P. (File No. 0-16690)
10.15 Limited Partnership Agreement of TCS Exhibit 10.15 to Registrant's Annual Report on Form
Television Partners, L.P. dated January 17, 10-K for the fiscal year ended December 31, 1991
1990 between Riverdale Media Corp. and ML (File No. 0-16690)
Media Opportunity Partners, L.P.
10.16 First Amendment to Credit Agreement dated as Exhibit 10.16 to Registrant's Annual Report on Form
among Maryland Cable Corp., and Citibank, of November 14, 1989 by and 10-K for the fiscal year
N.A., as Agent ended December 31, 1991 (File No. 0-16690)
10.17 Second Amendment to Credit Agreement dated Exhibit 10.17 to Registrant's Annual Report on Form
March 30, 1990 by and among Maryland Cable 10-K for the fiscal year ended December 31, 1991
Corp. and Citibank, N.A., as Agent (File No. 0-16690)
10.18 Security and Pledge Agreement between Exhibit 10.18 to Registrant's Annual Report on Form
General Cellular Corporation and ML Media 10-K for the fiscal year ended December 31, 1991
Opportunity Partners, L.P. dated as of June (File No. 0-16690)
15, 1990
10.19 Employment Agreement dated June 22, 1990 Exhibit 10.19 to Registrant's Annual Report on Form
between Jessica J. Josephson and 10-K for the fiscal year ended December 31, 1991
International Media Publishing, Inc. (File No. 0-16690)
10.19.1 Agreement dated November 1, 1992 between Exhibit 10.19.1 to Registrant's Annual Report on
Venture Media and Communications, L.P., ML Form 10-K for the fiscal year ended December 31, 1992
Media Opportunity Partners, L.P., Jessica J. (File No. 0-16690)
Josephson, International Media Strategies,
Inc. and International Media Publishing, L.P.
10.20 Limited Partnership Agreement of Exhibit 10.20 to Registrant's Annual Report on Form
International Media Publishing L.P. dated 10-K for the fiscal year ended December 31, 1991
June 22, 1990 (File No. 0-16690)
10.20.1 Bill of Sale and Agreement dated as of July Exhibit 10.20.1 to Registrant's Quarterly Report on
16, 1993 between International Media Form 10-Q for the quarter ended June 30, 1993
Publishing, L.P. and Phillips Business (File No. 0-16690)
Information Inc.
10.20.2 Bill of Sale and Agreement dated as of July Exhibit 10.20.2 to Registrant's Quarterly Report on
16, 1993 between Intelidata Limited and Form 10-Q for the quarter ended June 30, 1993
Phillips Business Information Inc. (File No. 0-16690)
10.20.3 Sale and Purchase Agreement dated as of Exhibit 10.20.3 to Registrant's Quarterly Report on
August 6, 1993 between Intelidata Limited Form 10-Q for the quarter ended September 30, 1993
and Romtec plc. (File No. 0-16690)
10.21 TCS Television Partners, L.P. Note Purchase Exhibit 10.21 to Registrant's Annual Report on Form
Agreement dated June 1, 1990 10-K for the fiscal year ended December 31, 1991
(File No. 0-16690)
10.22 Amended and Restated Credit Agreement dated Exhibit 10.22 to Registrant's Annual Report on Form
as of September 6, 1991, among Maryland 10-K for the fiscal year ended December 31, 1991
Cable Corp., Maryland Cable Holdings Corp. (File No. 0-16690)
and Citibank, N.A. as Agent
10.23 Participation Agreement dated as of Exhibit 10.23 to Registrant's Annual Report on Form
September 6, 1991, among ML Cable Partners, 10-K for the fiscal year ended December 31, 1991
L.P. and Citibank, N.A., as Agent (File No. 0-16690)
10.24 Limited Partnership Agreement of ML Cable Exhibit 10.24 to Registrant's Annual Report on Form
Partners, L.P. dated as of September 4, 1991 10-K for the fiscal year ended December 31, 1991
(File No. 0-16690)
10.25 Certificate of Limited Partnership of ML Exhibit 10.25 to Registrant's Annual Report on Form
Cable Partners, L.P. 10-K for the fiscal year ended December 31, 1991
(File No. 0-16690)
10.26 Warrant Purchase Agreement dated as of Exhibit 10.26 to Registrant's Annual Report on Form
September 6, 1991, among Maryland Cable 10-K for the fiscal year ended December 31, 1991
Holdings Corp. and Citibank, N.A., as Agent (File No. 0-16690)
10.27 Class A Warrant to Purchase Common Stock of Exhibit 10.27 to Registrant's Annual Report
on Form Maryland Cable Holdings Corp., dated 10-K for the fiscal year ended December 31, 1991
September 6, 1991 (File No. 0-16690)
10.28 Amended and Restated Subordination Agreement Exhibit 10.28 to Registrant's Annual Report on Form
dated as of September 6, 1991, among 10-K for the fiscal year ended December 31, 1991
Registrant, Maryland Cable Corp., Maryland (File No. 0-16690)
Cable Holdings Corp. and Citibank, N.A. as
Agent
10.29 Amendatory Agreement, dated as of September Exhibit 10.29 to Registrant's Annual Report on Form
6, 1991 among Maryland Cable Corp., Maryland 10-K for the fiscal year ended December 31, 1991
Cable Holdings Corp., and Citibank, N.A. as (File No. 0-16690)
Agent
10.30 Amended and Restated Guaranty to Maryland Exhibit 10.30 to Registrant's Annual Report on Form
Cable Corp., dated as of September 6, 1991, 10-K for the fiscal year ended December 31, 1991
by Citibank, N.A. as Agent, and Maryland (File No. 0-16690)
Cable Holdings Corp.
10.31 Agent's Fee Agreement dated as of September Exhibit 10.31 to Registrant's Annual Report on Form
6, 1991, between Citibank, N.A. and Maryland 10-K for the fiscal year ended December 31, 1991
Cable Corp. (File No. 0-16690)
10.32 Co-Sale Agreement dated as of September 6, Exhibit 10.32 to Registrant's Annual Report on Form
1991, among Registrant and Maryland Cable 10-K for the fiscal year ended December 31, 1991
Holdings Corp. (File No. 0-16690)
10.33 Agreement for the Sale and Purchase of Exhibit 10.33 to Registrant's Annual Report on Form
Information Research Division of Logica UK 10-K for the fiscal year ended December 31, 1991
Limited, dated December 17, 1991 (File No. 0-16690)
10.34 Memorandum and Articles of Association of Exhibit 10.34 to Registrant's Annual Report on Form
Intelidata Limited, dated as of October 18, 10-K for the fiscal year ended December 31, 1991
1991 (File No. 0-16690)
10.35 Agreement among Bob Banner Associates, The Exhibit 10.35 to Registrant's Annual Report on Form
Gary L. Pudney Co., ML Media Opportunity 10-K for the fiscal year ended December 31, 1991
Productions, Inc., and Registrant for (File No. 0-16690)
withdrawal of Bob Banner Associates and the
Gary L. Pudney Co. as General Partners from
Paradigm Entertainment L.P. dated May 31,
1991
10.35.1 Partnership Agreement dated June 23, 1992 Exhibit 10.35.1 to Registrant's Annual Report on
among Bob Banner Associates, Inc. and Form 10-K for the fiscal year ended December 31, 1992
Paradigm Entertainment, L.P. (File No. 0-16690)
10.36a Articles of Association of Media Ventures Exhibit 10.36a to Quarterly Report on Form 10-Q for
Investments Ltd. the quarter ended
March 31, 1992
(File No. 0-16690)
10.36b Special Resolution of Media Ventures Exhibit 10.36b to Quarterly Report on Form 10-Q for
Investments Ltd. the quarter ended March 31, 1992
(File No. 0-16690)
10.36c Articles of Association of European Media Exhibit 10.36c to Quarterly Report on Form 10-Q for
Partners, Ltd. the quarter ended March 31, 1992
(File No. 0-16690)
10.36d Special Resolution of European Media Exhibit 10.36d to Quarterly Report on Form 10-Q for
Partners, Ltd. the quarter ended March 31, 1992
(File No. 0-16690)
10.36e Certificate of Incorporation on Change of Exhibit 10.36e to Quarterly Report on Form 10-Q for
Name (various) the quarter ended March 31, 1992
(File No. 0-16690)
10.36f Resolution of Investment by ALP Enterprises Exhibit 10.36f to Quarterly Report on Form 10-Q for
in European Media Partners, Ltd. the quarter ended March 31, 1992
(File No. 0-16690)
10.36g Resolution of initial ownership structure of Exhibit 10.36g to Quarterly Report on Form 10-Q for
European Media Partners, Ltd. the quarter ended March 31, 1992
(File No. 0-16690)
10.36h Agreement to transfer of International Exhibit 10.36h to Quarterly Report on Form 10-Q for
Programme Ventures Limited to European Media the quarter ended March 31, 1992
Partners, Ltd. (File No. 0-16690)
10.36i Agreement for the Sale and Purchase of 50% Exhibit 10.36i to Quarterly Report on Form 10-Q for
of the issued Share Capital of Neomedion Ltd. the quarter ended March 31, 1992
(File No. 0-16690)
10.36j Listing of Shareholders at May 14, 1992 of Exhibit 10.36j to Quarterly Report on Form 10-Q for
Mediaventures Investments Ltd., European the quarter ended March 31, 1992
Media Partners, Ltd. and Neomedion Ltd. (File No. 0-16690)
10.37 Management Agreement by and between Exhibit 10.37 to Quarterly Report on Form 10-Q for
Fairfield Communications, Inc. and ML Media the quarter ended June 30, 1993
Partners, L.P. and Registrant dated May 15, (File No. 0-16690)
1993
10.37.1 Sharing Agreement by and among ML Media Exhibit 10.37.1 to Quarterly Report on Form 10-Q for
Partners, L.P., Registrant, RP Companies, the quarter ended June 30, 1993
Inc., Radio Equity Partners, Limited (File No. 0-16690)
Partnership and Fairfield Communications,
Inc.
10.37.2 Option Agreement by and between U.S. Radio, Exhibit 10.37.2 to Registrant's Annual Report on
Inc. and Registrant relating to station Form 10-K for the fiscal year ended December 31,
WMXN-FM dated January 25, 1994 1993
(File No. 0-16690)
10.37.3 Time Brokerage Agreement by and between U.S. Exhibit 10.37.3 to Registrant's Annual Report
on Radio, L.P. and Registrant relating to Form 10-K for the fiscal year ended December 31, 1993
station WMXN-FM dated January 25, 1994 (File No. 0-16690)
10.38 Order of the United States Bankruptcy Court, Exhibit 10.01 to Quarterly Report on Form 10-Q for
Southern District of New York, approving the quarter ended
nonmaterial modifications to the March 31, 1994
consolidated prepackaged plan of (File No. 0-16690)
reorganization of Maryland Cable Corp. and
Maryland Cable Holdings Corp.
10.39 Order of the United States Bankruptcy Court, Exhibit 10.02 to Quarterly Report on Form 10-Q for
Southern District of New York, confirming the quarter ended
debtors' first amended consolidated March 31, 1994
prepackaged debtors' first amended (File No. 0-16690)
consolidated prepackaged plan of
reorganization under Chapter 11 of the
United States Bankruptcy Code
10.40 Exchange agreement and plan of merger by and Exhibit 10.01 to Quarterly Report on Form 10-Q for
among Registrant, Western Wireless the quarter ended
Corporation, Markets Cellular Limited June 30, 1994
Partnership and others dated July 20, 1994 (File No. 0-16690)
10.41 Stockholders agreement by and among Western Exhibit 10.02 to Quarterly Report on Form 10-Q for
Wireless Corporation, Registrant and others the quarter ended June 30, 1994
dated July 29, 1994 (File No. 0-16690)
10.42 Asset purchase agreement between ML Media Exhibit 10.01 to Quarterly Report on Form 10-Q for
Opportunity Partners, L.P. and US Radio of the quarter ended
Norfolk, Inc. dated October 26, 1994 September 30, 1994
(File No. 0-16690)
10.43 Agreement between ML Media Opportunity Exhibit 10.02 to Quarterly Report on Form 10-Q for
Partners, L.P., MV Technology Limited, ALP the quarter ended
Enterprises Inc., European Media Partners September 30, 1994
Limited, and others dated August 12, 1994 (File No. 0-16690)
10.44 Share sale agreement between ML Media Exhibit 10.03 to Quarterly Report on Form 10-Q
Opportunity Partners, L.P., ALP Enterprises, for the quarter ended September 30, 1994
Inc., European Media Partners Limited, and (File No. 0-16690)
others dated August 12, 1994
10.45 Agreement by and among Bob Banner Exhibit 10.01 to Quarterly Report on Form 10-Q
Associates, Inc. and Paradigm for the quarter ended September 30, 1995
(File No. 0-16690)
10.46 Agreement dated as of Exhibit 10.01 to Quarterly Report on Form 10-Q
September 17, 1996, between TCS and CIGNA for the quarter ended September 30, 1996
Investments Inc. (File No. 0-16690)
10.47 Stock purchase agreement dated December 30, Exhibit 10.1 to Registrant's Form 8-K Report dated
1996 among TCS Television Partners, L.P., December 30, 1996
TCS Television, Inc., Fabri Development (File No. 0-16690)
Corporation and Nexstar
Broadcasting Group, L.L.C.
27.0 Financial Data Schedule to Form 10-K
Report for the fiscal year
ended December 31, 1998
99.1 Pages 13 through 21 and 41 through 50 of Exhibit 28.1 to Registrant's Annual Report on Form
Prospectus of the Partnership dated December 10-K for the fiscal year ended December 31, 1987
31, 1987, filed pursuant to Rule 424(b) (File No. 33-15502)
under the Securities Act of 1933
99.2 Pages 12 through 15, 17, 18, 22 through 25, Exhibit 28.2 to Registrant's Annual Report on Form
41 through 53 and 55 through 72 of 10-K for the fiscal year ended December 31, 1988
Prospectus for Maryland Cable Corp.'s (File No. 33-15502)
offering of $162,406,000 Senior Subordinated
Discount Notes due 1998 and Maryland Cable
Holdings Corp.'s offering of 2,000,000
Shares of Class B common Stock
99.3 Registrant's Proposed Letter to Limited Exhibit 99.3 to Registrant's Annual Report on Form
Partners dated April 2, 1997 10-K for the fiscal year ended December 31, 1996
(File No. 0-16690)
99.4 Merrill Lynch, Pierce, Fenner & Smith Exhibit 99.4 to Registrant's Annual Report on Form
Incorporated's Proposed Letter to Limited 10-K for the fiscal year ended December 31, 1996
Partners dated April 2, 1997 (File No. 0-16690)
</TABLE>
<PAGE>
(b) Reports on Form 8-K.
None.
(c) Exhibits.
See (a)(3) above.
(d) Financial Statement Schedules.
See (a)(2) above.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, Registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
ML MEDIA OPPORTUNITY PARTNERS, L.P.
By: Media Opportunity Management Partners
General Partner
By: ML Opportunity Management Inc.
Dated: March 31, 1999 /s/ Kevin K. Albert
-------------------
Kevin K. Albert
Director and President
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of Registrant in the
capacities and on the dates indicated.
RP OPPORTUNITY MANAGEMENT, L.P.
By: IMP Opportunity Management Inc.
a general partner
<TABLE>
<S> <C> <C>
Signature Title Date
/s/ I. Martin Pompadur Director and President(principal March 31, 1999
- ----------------------
(I. Martin Pompadur) executive officer of the Registrant)
/s/Elizabeth McNey Yates Executive Vice President March 31, 1999
- ------------------------
(Elizabeth McNey Yates)
</TABLE>
<PAGE>
ML OPPORTUNITY MANAGEMENT INC. ("MLOM")
<TABLE>
<S> <C> <C>
Signature Title Date
Each with respect to MLOM unless
otherwise
noted)
/s/ Kevin K. Albert Director and President March 31, 1999
- -------------------
(Kevin K. Albert)
/s/ James V. Caruso Director and Executive Vice President March 31, 1999
- -------------------
(James V. Caruso)
/s/ David G. Cohen Director and Vice President March 31, 1999
- ------------------
(David G. Cohen)
/s/ Robert J. Remick Treasurer March 31, 1999
- --------------------
(Robert J. Remick) (principal accounting officer and
principal financial officer of the
Registrant)
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
year ended 1998 Form 10-K Consolidated Balance Sheets and Consolidated
Statements of Operations as of December 31, 1998, and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<CASH> 10,153
<SECURITIES> 0
<RECEIVABLES> 37
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 10,279
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 10,279
<CURRENT-LIABILITIES> 2,072
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 8,207
<TOTAL-LIABILITY-AND-EQUITY> 10,279
<SALES> 0
<TOTAL-REVENUES> 1,474
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 2,045
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (571)
<INCOME-TAX> 0
<INCOME-CONTINUING> (571)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (571)
<EPS-PRIMARY> (5.04)
<EPS-DILUTED> 0
</TABLE>
